Company Tax Calculation and Return Preparation In Bangladesh 2024

Company Tax Calculation and Return Preparation In Bangladesh
Company Tax Calculation and Return Preparation In Bangladesh

Follow today’s discussion for detailed information on company tax calculations, rates, and payments. Hopefully, today’s discussion will answer all the questions you may have regarding company tax. Let’s get to today’s main discussion about company tax.

All companies, whether private or public limited, must pay tax in a specific fiscal year as per the tax laws of Bangladesh. He has to pay this tax at a particular time every year. If the tax is not paid in due time, the company has to get involved in the case.

Company Tax In Bangladesh In 2024

In Bangladesh, the tax rate for private limited companies in 2023 is set to be up to 45% for companies with an annual turnover of up to 1 crore BDT (Bangladeshi Taka) and 40% for publicly traded companies with a yearly turnover of more than 1 crore BDT which Bangladesh National Board Of Revenue sets.

This tax rate applies to both domestic and foreign companies operating in Bangladesh. Companies are also required to pay Value Added Tax (VAT) at a rate of 15% on the sales of goods and services. Additionally, there may be other taxes, such as import duty and excise duty, that companies may need to pay.

Many of us know about taxes and companies, but we have no idea what kind of tax a company has to pay. Not all company taxes are the same. Tax rates vary from company to company. For this, we first need to know the company’s tax rate.

Company Tax Rates in Bangladesh

First of all, we will know about the company’s tax rate, which means how much tax has to be paid to a company according to the tax rules of Bangladesh. Let’s get started.

  • Non-Publicly Traded/Private Limited Companies- 32.50%
  • Publicly traded companies- 25.00%

Banks, Insurance, and Financial Institutions (Except Merchant Banks)

  • Publicly traded – 37.50%
  • Not Publicly Traded- 40.00%
  • Merchant Bank- 37.50%
  • Companies manufacturing all types of tobacco products, including cigarettes, Biris, Jorda, and Gul – 45.00%

Mobile Phone Operator

  • Publicly Traded- 40.00%
  • Not Publicly Traded – 45.00%
  • Declared and paid dividends of any company registered in Bangladesh and repatriation of profits (dividends) of foreign companies not registered in Bangladesh- 20.00%
  • The company is not a manufacturer of all tobacco products, including cigarettes, Biris, Jordas, and Guls – 45.00% of the income earned from the said business of the taxpayer.
  • Tax applicable on income in case of a partnership- 32.50%
  • In the case of all other taxpayers other than companies and individuals, non-residents of Bangladesh– 30.00%
  • In the case of Cooperative Societies registered under the Cooperative Societies Act 2001 – 15.00%

It should be noted here that if the net tax liability of a company is less than 0.6% of the gross receipts, then the minimum tax of 0.6% of the gross receipts will apply to that company.

Even if the company loses in a financial year, it still has to pay a tax of 0.6% of the gross receipts.

Company Tax Calculation In Bangladesh

Above we know what percentage of tax a company has to pay. Now we will understand how we will calculate tax on it. Let us know the calculation through an example.

Think, the total service revenue of a private company is 125,000,000, and the total taxable income of that company is 1,500,000.

Now that the company is a private company, the total taxable income of the company will be taxed at 32.50%.

Then the total taxable income will be 1,500,000 = 1,500,000 x 32.50% = 487,500.

One more thing we need to calculate is the total tax at 0.6% of gross receipts. Then the tax comes at the rate of 0.6% of the total receipts of that company = 125,000,000 x 0.6% = 750,000

Here the tax on the total taxable income of the company is less than the tax at the rate of 0.6% of the gross receipts. He has to pay the tax at a minimum rate of 0.6%.

It is noted here that the higher of these two accounts are to be paid by the company. It must be paid if the tax is more than 0.6% of the total taxable income. And if it is less than 0.6%, that company must pay a minimum of 0.6% of gross receipts.

If a company makes a loss for a financial year, it has to pay at least 0.6% tax on its gross receipts.

TAX Return Preparation In Bangladesh

In Bangladesh, the calculation and preparation of company tax are governed by the provisions of the Income Tax Ordinance, 1984, and the Income Tax Rules, 1984. The tax system in Bangladesh is based on the self-assessment method, which means that companies are responsible for calculating and paying their taxes. Here’s a general overview of the steps involved in tax return preparation in Bangladesh:

  • Determine Tax Liability: Companies need to determine their tax liability by calculating their taxable income. The taxable income is the total income minus any deductible expenses and allowances. Companies can deduct various expenses, such as salaries, rents, repairs, and depreciation, from their taxable income.
  • Calculate Tax: Companies must calculate their tax liability based on the tax rate specified by the government for the fiscal year. In Bangladesh, the tax rate for companies varies based on the size of the company’s taxable income.
  • File Tax Return: Companies must file their tax return with the National Board of Revenue (NBR) by the due date. The tax return must include details of the company’s taxable income, tax liability, and any tax payments made during the fiscal year.
  • Pay Tax: Companies must pay the tax liability to the government on or before the due date. Tax payments can be made through various modes, such as online banking, cheques, or cash.

It’s important to note that companies in Bangladesh must also comply with other tax-related obligations, such as maintaining proper records and accounts, submitting tax returns on time, and paying taxes promptly. Failure to comply with these obligations may result in penalties, fines, or legal action.

Company Tax Return Time

Filing a Company Tax Return or Income Tax Return is mandatory under the Income Tax Act. The last date for filing individual returns is November 30. But the last date for filing the company return is the 15th day of the 7th month after the end of the financial year.

Every year, with few exceptions, all companies must file their income tax returns by January 15. However, this time can be extended up to May 15 by applying twice.

Companies have to comply with many laws. After company registration, the rent agreement, trade license, and bank account should be opened.

As soon as possible after opening the bank account, the company’s paid-up capital should be transferred from the directors’ bank account to the company’s bank account through a check.

The paid-up capital must be credited to the bank account in the financial year the company is incorporated. Otherwise, the paid-up capital will be disregarded. The tax office will assess the tax on the paid-up capital.

Audit report and bank account statement must be submitted with the company’s tax return. So after forming the company, care must be taken to avoid any unwanted transactions in the bank account.

Last Words

In conclusion, the calculation and preparation of company tax in Bangladesh requires a comprehensive understanding of the tax laws and regulations. Companies are responsible for calculating and paying their taxes and must file their tax returns on time to avoid any penalties or legal action.