Tax Incentives and Exemptions

Bangladesh provides for tax incentives for foreign companies investing in special economic zones and hi-tech park zones (in the form of gradually decreasing tax discounts). Qualifying industrial undertaking set up between 1 July 2011 and 30 June 2019 are also entitled to gradual tax discounts, with rates varying from one region to another. Capital gains arising from the disposal of listed shares are subject to a 10% tax whereas those arising from the transfer of other types securities are taxed at 15%. Non-residents are exempt from tax on their capital gains arising from the disposal of listed shares if they enjoy a similar exemption in their country of origin (otherwise they are taxed at the standard rates).

Following are fiscal incentives available to a taxpayer:-

Tax Holiday: Tax holiday is allowed for industrial undertaking and physical infrastructure facility established between 1st July 2011 to 30th June 2019 in fulfillment of certain conditions.

Industrial Undertaking eligible for Tax holiday :

(a) active pharmaceuticals ingredient industry and radio pharmaceuticals industry;

(aa) automobile manufacturing industry;

(b) barrier contraceptive and rubber latex;

(c) basic chemicals or dyes and chemicals;

(d) basic ingredients of electronic industry (e.g resistance, capacitor, transistor, integrator circuit);

(dd) bi-cycle manufacturing industry;

(e) bio-fertilizer; (will get tax holiday even it is set up in distict of Dhaka, Narayanganj, Gazipur, Chittagong, introduced in FA 2012)

(f) biotechnology;

(g) boilers;

(gg) brick made of automatic hybrid Hoffmann kiln or Tunnel Kiln technology;

(h) compressors;

(i) computer hardware;

(j) energy efficient appliances;

(k) insecticide or pesticide;

(l) petro-chemicals;

(m) pharmaceuticals;

(n) processing of locally produced fruits and vegetables;

(o) radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or preservation of food or disinfecting medicinal equipment);

(p) textile machinery;

(q) tissue grafting;

(qq) tyre manufacturing industry; or

(r) any other category of industrial undertaking as the Government may, by notification in the official Gazette, specify.

Physical Infrastructure eligible for Tax holiday:

(a) deep sea port;

(b) elevated expressway;

(c) export processing zone;

(d) flyover;

(e) gas pipe line,

(f) Hi-tech park;

(g) Information and Communication Technology (ICT) village or software technology zone;

(h) Information Technology (IT) park;

(i) large water treatment plant and supply through pipe line;

(j) Liquefied Natural Gas (LNG) terminal and transmission line;

(k) mono-rail;

(l) rapid transit;

(m) renewable energy (e.g energy saving bulb, solar energy plant, windmill);

(n) sea or river port;

(o) toll road or bridge;

(p) underground rail;

(q) waste treatment plant; or

(r) any other category of physical infrastructure facility as the Government may, by notification in the official Gazette, specify.

Other Exemptions:

(a) Any service charge derived from operation of micro credit by a non-government organization registered with NGO Affairs Bureau.

(b) Any voluntary contributions received by a religious or charitable institution and applicable solely to religious and charitable purposes;

(c) Any income accruing to, or derived by, a provident fund to which the Provident Fund Act, 1925 (XIXof 1925), applies;

(d) Any income received by the trustees on behalf of a recognized provident fund, an approved superannuation fund or pension fund and an approved gratuity fund;

(e) Any amount of income received as pension;

(f) Gratuity received up to Tk. 2.5 crore;

(g) Income from dividend amounting to Tk. 25,000 received from a publicly traded company; (h) Income from dividend of a mutual fund or a unit fund up to taka 25000;

(i) An amount equal to 50% of the income derived from export business is exempted from tax;

(j) Any income, not exceeding two lakh taka chargeable under the head “agricultural income” of an assessee, being an individual, whose only source of income is agriculture;

(k) Income from Information Technology Enabled Services (ITES) or Nationwide Telecommunication Transmission Network (NTTN) business is exempted up to 30th June, 2024;

(l) Income derived from export of handicrafts is exempted from tax up to 30th June, 2019;

(m) Income of any private Agricultural College or private Agricultural University derived from agricultural educational activities;

(n) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods and having an annual turnover of not more than taka thirty lakh is exempt from tax;

(o) Any profits and gains under the head “Capital Gains” arising from the transfer of stocks or Shares of a public company as defined in †Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb) listed in any stock exchange in Bangladesh of an assessee being a non-resident subject to the condition that such assessee is entitled to similar exemption in the country in which he is a resident;

(p) An amount equal to fifty percent of the income of an assessee derived from the production of corn/maize or sugar beet;

(q) Any income earned in abroad by an individual assessee being a Bangladeshi citizen and brought any such income into Bangladesh as per existing laws applicable in respect of foreign remittance; (r) Income of an assessee donated in an income year by a crossed cheque to any girls’ school or girls’ college approved by the Ministry of Education of the government;

(s) Income of an assessee donated in an income year by a crossed cheque to any Technical and Vocational Training Institute approved by the Ministry of Education of the government;

(t) Income of an assessee donated in an income year by a crossed cheque to any national level institution engaged in the Research & Development (R&D) of agriculture, science, technology and industrial development

Written on January 28, 2020