The Budget for fiscal year 2016-2017 was presented on 2 June 2016. Budget measures relating to corporate taxation, once adopted, will take effect from 1 July 2016. Some of the proposed measures are following:

  • the minimum tax rates will be increased from 0.6% to 1%;
  • the income year for subsidiaries of any banks and insurance and financial institutions must coincide with the calendar year, i.e. 1 January to 31 December;
  • 5% additional tax imposed on public listed companies for declaring dividends of less than 15% will be withdrawn;
  • the payment of salary to an employee who is not a holder of a 12 digit taxpayer’s identification number (TIN) will not be allowed as a deduction;
  • the allowable deduction for overseas travelling expenditure will be increased from 1% to 1.25% of disclosed turnover;
  • 5% WHT rate will be increased on export proceeds;
  • 5% WHT rate will be levied on any interest on any savings, fixed or term deposits maintained by a tax-exempt fund;
  • interest on savings instruments in the hands of an approved superannuation fund, pension fund or gratuity fund, or a recognized provident fund or Workers’ Profit Participation Fund, previously exempt, will now be subject to 5% withholding tax if the investor’s cumulative investment at the end of the relevant income year exceeds BDT 0.5 million; and
  • the limit for turnover for the purpose of tax exemption for any small to medium-sized enterprises will be increased from BDT 3 million to BDT 3.6 million.