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Taxes in Bangladesh

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Below are the important categories of taxes in Bangladesh.

  • Personal Income Tax: The rates of Personal Incomes Taxes (PITs) are determined on the basis of differentiated income of different income groups. Bangladesh’s tax system has five income brackets. There are differentiated
    rates and tax exemptions for different types of taxpayers, for instance the threshold of taxable income for women and senior citizens of 65 years and above is 3.00 lakh, 3.75 lakh for physically challenged persons and 4.25 lakh for war-wounded gazette freedom fighters.
  • Wealth Tax: Despite having a structured mechanism of corporate and personal income taxation, the country still
    lacks a systematic wealth tax mechanism. There is no systematic effort of assessing property and financial assets, and of collecting taxes accordingly, yet there are provisions of imposing a 10% surcharge on net wealth, the threshold is TK. 2 crore and 25 lakh of the price of net wealth in 2015-16.
  • Corporate Income Tax: Rates of corporate income tax also vary from company to company on the basis of their type. Usually the agro-based industries enjoy low taxation in comparison to manufacturing and service providing
    industries. Yet, a number of export oriented manufacturing industries, e.g. readymade garments (RMG), enjoy tax holidays and other advantages like low import tariffs on imported materials.
  • Excise duty: Bangladesh has no excise tax as such, it is an excise duty. An excise duty is a tax on sales or production for sale. Such duty is considered as an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover or shift the tax by raising the price paid by the buyer. The excise duty applies to only two items: bank deposits and domestic air tickets. Excise duty on Bank deposits starts with Tk 150 per deposit account per year, if the balance ranges between Tk 20,000 to Tk 100,000. The highest charge is Tk 150,000 when the balance, whether credit or debit, exceeds Taka Five crore at any time during a year.
  • Value Added Tax (VAT): This tax applies to the market value added to a product or material at each stage of its manufacture or distribution.A simple VAT is regressive in that lower-income consumers generally consume a higher fraction of their income than others, and the VAT does not apply to income that is saved/invested. VATs often exclude certain goods, with the intent of creating some degree of progressivity.
  • Trade Tax: The share of import and export based tax in total tax receipts has been declining; it was 73.98% in 2005 and dropped to 27.57% in 2014. The major decline happened from FY 2009 onwards: in 2009 it stood at 68.84%, dropping to36.83%. The rates of trade tax vary from product to product; higher rates are usually put on luxury goods, and lower rates on essential goods that are not produced locally. There is zero import duty on some products e.g. computer and computer accessories.
  • Presumptive/Turnover tax: The contribution of the turnover tax to total tax revenue is very little: 4 to 6 crore Taka from FY 2005 to 2014. The share of turnover taxes has also declined over the period: from 0.019% to 0.004%. Turnover tax (TT) has preferential provision for small enterprises with an annual turnover below Tk. 80 lakh. They pay turnover tax at a lower rate of 3 percent. Under the ‘turnover tax’ provision, an entrepreneur has to keep a minimum ledger accounting that could reduce his administrative cost.
  • Gender Analysis: The gender implications of fiscal policy are a critical concern in a country like Bangladesh, where a number of problems affect mostly women. The unequal property ownership, wage discrimination and the unequal distribution of power in the household, these need to be taken into account in designing fiscal policies. Women have been considered only in the tax-exemption threshold for individual taxpayers; in other areas of taxation, there is no different rate for women and men. In the exemption threshold for individual taxpayers, there is different rate for women and men. The proposed taxexemption threshold for individual taxpayers was raised from Tk. 2 lakh 20 thousand to Tk. 2.5 lakh and from Tk. 2.75 lakh to Tk. 3 lakh for women.