Corporate Income Tax Rate in Bangladesh 2023 – The Corporate Income Tax (CIT) in Bangladesh is a taxation framework specifically designed for corporations operating within the country. Within the broader context of Bangladesh’s taxation system, corporate income tax holds considerable significance as a key avenue for the government to generate revenue. In the overall spectrum of income taxation, two primary areas are distinguished, namely Personal Income Tax (PIT) and Corporate Income Tax (CIT).
Corporate income tax, being a pivotal element, encompasses a diverse range of entities such as companies, banking institutions, insurance companies, financial entities, multinational corporations, branch offices, liaison offices, Associations of Persons (AOP), legal entities, and more.
Deadline to submit Corporate Income Tax
As like Individuals, corporations are also required to submit their income tax returns on or before Tax Day, a deadline that varies based on the income year, also referred to as the “Accounting year,” of the respective corporation. The term “Accounting year” is interchangeable with the income year for corporations. Section 2(23) of the Income Tax Act 2023 outlines that Tax Day is determined as the 15th day of the 7th month following the end of the accounting year. However, if the said 15 days of the 7th month fall before September 15th, Tax Day is considered to be September 15th.
The specifics of the accounting year, as defined by Section 2(15) of the Income Tax Act 2023, are as follows:
- For local companies, the accounting year spans from July 1st to June 30th.
- Banking institutions, insurance companies, and financial entities (including their subsidiaries) follow an accounting year from January to December.
- Multinational companies adhere to the accounting years mentioned above, although they have the flexibility to maintain a different accounting year for consolidation purposes with their parent company, provided they obtain approval from the Deputy Commissioner of Taxes (DCT).
This detailed discussion on the accounting year is crucial, as Tax Day is contingent on the specific accounting year of each corporation. In summary, the snapshot of Tax Day for the submission of income tax returns is as follows:
Notes:
- Tax Day will be the 15th day of 7 Months however it will be 15 September if the said 15 day of 7 months fall before 15 September
- If the said 15th day of 7 months or 15 September is Govt. Holiday then the next working day.
Corporate Income Tax Rate in Bangladesh 2023
Corporate Income tax rate in Bangladesh for 2023 (Assessment Year (AY) 2023-24) are as follows:
| Nature of Entity | Tax rate | Remarks | Reference |
| Listed companies with more than 10% paid-up capital raised through Initial Public Offering (IPO) | 20% | The rate is increased to 22.50% if the conditions are not met. | Finance Act 2023 |
| Listed companies with 10% or less paid-up capital raised through Initial Public Offering (IPO) | 22.50% | The rate is increased to 25% if the conditions are not met. | Finance Act 2023 |
| One person company (OPC) | 22.50% | The rate is increased to 25% if the conditions are not met. | Finance Act 2023 |
| Private Limited Companues (not publicly traded companies) | 27.50% | The rate is increased to 30% if the conditions are not met. | Finance Act 2023 |
| Listed banks, insurance, and other financial institutions, including mobile financial services providers | 37.50% | Finance Act 2023 | |
| Unlisted banks, insurance, and other financial institutions, including mobile financial service providers | 40% | Finance Act 2023 | |
| Merchant banks | 37.50% | Finance Act 2023 | |
| Tobacco manufacturers | 45% | Plus 2.5% surcharge as Tobocco | Finance Act 2023 |
| Listed mobile phone operators | 40% | Finance Act 2023 | |
| Unlisted mobile phone operators | 45% | Finance Act 2023 | |
| Ready-made garment manufacturers and exporters | 12% | 10% if have green building certification. | SRO No 210-Law/Income Tax-05/2023, dated 26 June 23 |
| Export-oriented companies | 12% | 10% if have green building certification. | SRO No 210-Law/Income Tax-05/2023, dated 26 June 23 |
| Textile industries | 15% | SRO No 159-Law/Income Tax/2022, dated 01 June 22 | |
| Jute goods exporters | 10% | SRO No 304-Law/Income Tax-18/2023, dated 5 Nov 23 | |
| Private universities, private medical, dental, and engineering colleges, and private colleges solely dedicated to imparting education on information and communication technology | 15% | Finance Act 2023 | |
| Association of Persons (AOP) | 27.50% | The rate is increased to 30% if the conditions are not met. | Finance Act 2023 |
| Banch and Liaison office | 27.50% | The rate is increased to 30% if the conditions are not met. | Finance Act 2023 |
| Artificial Juridical Persons | 27.50% | The rate is increased to 30% if the conditions are not met. | Finance Act 2023 |
| Trust | 27.50% | The rate is increased to 30% if the conditions are not met. | Finance Act 2023 |
| Fund (Provident Fund, Gratuity Fund etc.) | 15% | Rate reduced by SRO | SRO No 333-Law/Income Tax-20/2023, dated 6 Dec 23 |
| Cooperatives Societies | 15% | Finance Act 2023 |
Conditions for which additional 2.5% tax will be imposed
As per Finance Act 2023, any income, receipts, or individual transactions exceeding BDT 500,000, along with all types of expenses and investments exceeding BDT 3,600,000 annually, must be executed through bank transfers. Failure to adhere to this requirement triggers a consequence wherein the corporate income tax rate applied to a taxpayer’s total income is escalated by an additional 2.5 percentage points. In essence, the imposition of this condition serves as an incentive for financial transactions and dealings to be conducted through the formal banking channels, contributing to enhanced financial transparency and regulatory compliance.
Capital gain tax for Corporate
According to Para 1 of the 7th Schedule of Income Tax Act 2023, the capital gain tax rate for a company is set at 15%. This implies that companies are subject to a lower tax rate when it comes to capital gain income. To provide a comparative perspective, if we examine the tax rate for business income for private limited companies, it stands at 27.5%. However, when these companies generate capital gains, the applicable tax rate is notably reduced to 15%.
Dividend tax for Corporate
According to the provisions outlined in Para 2 of the 7th Schedule of Income Tax Act 2023, companies are subjected to a dividend tax rate of 20%. This implies that companies are afforded a more favourable tax treatment when it comes to dividend income. Specifically, when examining private limited companies, a distinction arises between the tax rates applicable to regular business income and dividend income. For the former, the tax rate stands at 27.5%, while for the latter, the tax rate is notably reduced to 20%.
Minimum tax on gross receipts
As outlined in Section 163(5) of the Income Tax Act 2023, corporate entities are obligated to fulfil an additional fiscal obligation known as the alternative minimum tax, calculated on the basis of their gross receipts. For the fiscal year 2023-24, the rates applicable to gross receipts are as follows:
| Sl No. | Classes of assessee | Rate of minimum tax |
| 1 | Manufacturer of cigarette, bidi, chewing tobacco, smokeless tobacco or any other tobacco products | 3% of the gross receipts |
| 2 | Carbonated Beverage | 3% of the gross receipts |
| 3 | Mobile phone operator | 2% of the gross receipts |
| 4 | Any other cases | 0.60% of the gross receipts |
Notes:
- Minimum tax shall be 0.10% for an industrial undertaking engaged in manufacturing of goods for the first three income years since the commencement of its commercial production.
- Rate of minimum tax for carbonated beverage has been reduced to 3% from 5% by SRO No. 259-Law/Income Tax-08,2023, dated 29 August 2023.
Tax on disallowances
In accordance with the provisions stipulated in Section 56 of the Income Tax Act 2023, in the event of any disallowance occurring under Section 55 of the same Act, a company is obligated to pay tax at the standard applicable rate, which stands at 27.5%, on the disallowed amount. This means that tax have to be paid on the disallowance irrespective of losses, the ability to carry forward losses, or any tax exemptions.
Minimum tax due to TDS
As per Section 163(2) of the Income Tax Act 2023, it has been stipulated that a total of 54 Sections of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) are categorized as minimum tax. This classification signifies that any tax amount collected or deducted under these specified sections will be considered as minimum tax during the computation of the corporate income tax liability.
As part of our ongoing efforts, we are currently in the process of compiling a comprehensive list of TDS and TCS sections that fall under minimum tax within the framework delineated by Section 163 of Income Tax Act 2023. Once this compilation is complete, we will promptly provide the relevant information for your reference.
Conclusion - Corporate Income Tax Rate in Bangladesh 2023
This article outlines the Corporate Income Tax Rate in Bangladesh 2023. Given the dynamic nature of tax regulations, it’s essential to stay informed about any updates. If you have any questions, please don’t hesitate to ask in the comment section below.
Corporate Income Tax Rate in Bangladesh 2023 - Reference/ Source:
- Finance Act 2023;
- Section 2(23) of Income Tax Act 2023;
- Section 2(15) of Income Tax Act 2023;
- Para 1 of 7th Schedule of Income Tax Act 2023;
- Para 2 of 7th Schedule of Income Tax Act 2023;
- Section 163 of Income Tax Act 2023;
- Section 55 of Income Tax Act 2023;
- Section 56 of Income Tax Act 2023;
- National Board of Revenue (NBR);
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