The Bangladesh parliament has passed the Finance Bill 2024 on 30 June, 2024, which amends several laws related to individual tax, corporate tax, and vat and supplementary duty. The bill was introduced by Finance Minister Abul Hassan Mahmood Ali, which was passed by voice votes and presided by Speaker Dr. Shirin Sharmin Chaudhury.

Corporate Tax

Corporate Income Tax Rates
For the AY 2024-25, the corporate income tax rates are updated as follows:

(a) Non-publicly traded companies: 27.5% (may reduce to 25% subject to certain conditions).

(b) Publicly traded companies: Company that issues shares more than 10% of paid-up capital through IPO: 22.5% (may reduce to 20% subject to certain conditions). Company that issues shares less than 10% of paid-up capital through IPO: 25% (may reduce to 22.5% subject to certain conditions).

(c) One person companies: 22.5% (may reduce to 20% subject to certain conditions).

(d) Merchant banks: 37.5%.

(e) Publicly traded banks, insurance, and financial institutions: 37.5%.

(f) Non-publicly traded banks, insurance, and financial institutions: 40%.

(g) Publicly traded mobile operator companies: 40%.

(h) Non-publicly traded mobile operator companies: 45%.

(i) Tobacco products manufacturers: 45% plus a 2.5% surcharge.

Condition for Reduced Rates: All income and receipts must be made through bank transfers. Single transactions exceeding BDT 500,000 and annual transactions exceeding BDT 3.6 million in expenses and investments must be made through bank transfers.

IT enabled services eligible for tax exemption:
The government has announced a comprehensive list of IT Enabled Services eligible for tax exemption until 30 June 2027. These include AI-based solution development, blockchain-based solution development, robotics process outsourcing, software as a service, cybersecurity service, digital data analytics and data science, mobile application development service, software development and customisation, software test lab service, web listing, website development, and service, IT assistance and software maintenance service, geographic information service, digital animation development, digital graphics design, digital data entry and processing, e-learning platform and e-publication, IT freelancing, call centre service, and document conversion, imaging, and digital archiving.

Tax audit
Any taxpayer with an income increase by 15% from the previous year’s income tax returns will not have to face an audit.

Withholding Tax return
The deadline for submitting withholding tax returns will be shifted from the 15th to the 25th day of the following month. Additionally, the DCT’s ability to grant extensions of up to 15 days will no longer be in effect.

VAT and Supplementary Duty

Change in definition

The definition of “VAT withholding entity” includes “any person or organisation with a yearly turnover exceeding BDT 100 million” [Section 2(21)].

VAT has been increased for the following products:

The government has increased the value-added tax (VAT) on more than 13 goods and services, including LED bulbs and tube lights, various juices, mango bars, rolling paper, security services, auction services, refrigerators, and air conditioners from 5% to 15%.

Individual Tax

Tax rates on thresholds of income for individual
The tax rates on thresholds of income for individuals, Hindu undivided families, and partnerships in Bangladesh have been changed as follows:

  • Income up to BDT 350,000: No tax
  • The next BDT 100,000: Taxed at 5%
  • The next BDT 400,000: Taxed at 10%
  • The next BDT 500,000: Taxed at 15%
  • The next BDT 500,000: Taxed at 20%
  • The next BDT 2 million: Taxed at 25%
  • Any amount above BDT 3,850,000: Taxed at 30%

These changes aim to increase tax revenue from high-income individuals and raise the tax-GDP ratio as part of the IMF’s loan package requirements.

Tax-free income thresholds for individuals
The tax-free income thresholds for individuals (including non-resident Bangladeshis), Hindu undivided families, and partnership firms in Bangladesh have remained largely unchanged in the Finance Act, 2023-24:

  • Individuals: The tax-free income limit remains at BDT 350,000. This has been the case since FY 2023-24.
  • Women and Senior Citizens (65+ years): The tax-free income limit remains at BDT 400,000.
  • Physically Challenged Persons and Third Gender Taxpayers: The tax-free income limit remains at BDT 475,000.
  • War-Wounded Freedom Fighters: The tax-free income limit remains at BDT 500,000.
  • Parents/Guardians of Physically Challenged/Adopted Children: The threshold is increased by BDT 50,000 per child.

Black money whitening capacity
The Finance Bill maintains provisions which allow undisclosed money to be whitened with a 15% tax rate.