ASSIGNMENT

For The Partial Fulfillment of the Course,

COURSE: TAXATION (ACN-4135)

SUBMITTED TO,

PROF. DR. SWAPAN KUMAR BALA, FCMA

SUBMITTED BY,

ISMAT JERIN CHETONA

ID-111083068

SEC: B

UNITED INTERNATIONAL UNIVERSITY

DATE OF SUBMISSION: 31st DECEMBER, 2011

CORPORATE TAXATION IN BANGLADESH

FISCAL ENVIRONMENT OF STOCK MARKET IN BANGLADESH

FISCAL ENVIRONMENT OF STOCK MARKET IN BANGLADESH

The share market in a country is the engine of raising capital, which accelerates industrialization and the process of privatization. Share market means the share and stock markets of the country. It is a market for long term fund. With the emergence of the need for infrastructural development projects, for setting up of new industries for entrepreneurial attempts-now there are more frequent needs of funds.

Participants in the share market are many. They include the commercial banks, saving and loan associations, credit unions, mutual saving banks, finance houses, finance companies, merchant bankers, discount houses, venture capital companies, leasing companies, investment banks & companies, investment clubs, pension funds, stock exchanges, security companies, underwriters, portfolio-managers, and insurance companies. The main market participants are: ▪ Investors

▪ Brokers

▪ Dealers

▪ Underwriter

▪ Investment Banks

▪ Merchant Banks

Structure of the Share Market in Bangladesh

Bangladesh capital market is one of the smallest in Asia but within the south Asian region. It is the third largest one. It has two full full-fledged Automated Stock Exchanges: Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and an OTC exchange operated by CSE.

It also consists of regulator, the Securities and Exchange Commission (SEC), since, it implements rules and regulations, monitors their implications to operate and develop the capital. The share-market consists of Central Depository Bangladesh Limited (CDBL), the only Central Depository in Bangladesh that provides facilities for settlement of transactions of dematerialized securities in CSE market and DSE.

DSE and CSE: Core capital markets of the country

Dhaka Share Market consists of the Dhaka Stock Exchange or DSE, the main share market of Bangladesh. Dhaka Share Market is still at its infant stage and has to walk a long way for coming into the radar of the Global Financial Market. The Chittagong Stock Exchange (CSE) began its journey in 10th October of 1995 from Chittagong City through the trading system with the promise of creating a state of the art bourse of the country.

The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and its activities are regulated by its Articles of Association rules & regulations and bye-laws along with the Securities and Exchange Ordinance - 1969, Companies Act - 1994 & Securities & Exchange Commission Act - 1993.

Chittagong Stock Exchange is a stock exchange located in the port city of Chittagong in southeastern Bangladesh. It was established in 1995 as the second stock exchange of the country. The exchange is located in the Agrabad commercial area of the city. It's a very small exchange which trade volume is less than many brokerage houses in Bangladesh.

Central Depository Bangladesh Limited (CDBL), a joint venture company setup by banks, stock exchange, Asian Development Bank and other institutions operates the Central Depository System (CDS) in Bangladesh of Electronic Book Entry, recording and maintaining securities accounts and registering transfer of securities; changing the ownership without an physical movement or endorsement of certificates and execution of transfer instruments, as well as various other investor services including facilitation of the secondary market trading of Treasury Bills and Government Bonds issued by the Bangladesh Bank..

Taxation Imposed on Share Market in Bangladesh

Publicly Traded Company
Dividend declared by less than 10% or failure to pay declared dividend 27.5% within SEC stipulated time (30 days from 9.2.10)
Other situation 37.5% Other company 37.5%
Minimum Tax irrespective of profit or loss: Taka 5,000
If dividend paid at more than 20%, 10% rebate on applicable tax.

Dividend Includes:

(a) any distribution by a company of accumulated profits, whether capitalized or not, if such distribution entails the release by the company to its shareholders of all or any part of its assets or reserves;

(b) any distribution by a company, to the extent to which the company possesses accumulated profits, whether capitalized or not, to its shareholders of debentures, debenture-stock or deposit certificates in any form, whether with or without interest;

(c) any distribution made to the shareholders of a company on its liquidation to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalized or not;

(d) any distribution by a company to its shareholders on the reduction of its capital, to the extent to which the company possesses accumulated profits, whether such accumulated profits have been capitalized or not;

(e) any profit remitted outside Bangladesh by a company not incorporated in Bangladesh

(f) any payment by a private company of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company, in either case, possesses accumulated profit; but does not include—

(i) a distribution made in accordance with sub-clause (c) or sub-clause (d) in respect of any share including preference share for full cash consideration, or redemption of debentures or debenture-stock, where the holder of the share or debenture is not entitled in the event of liquidation to participate in the surplus assets;

(ii) any advance or loan made to a shareholder in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;

(iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as dividend within the meaning of sub-clause (e) to the extent to which it is so set off;

(iv) any bonus share issued by a company;

Exemption of Dividend from Mutual Fund or Unit Fund:
Any income from dividend of a mutual fund or a Unit fund where such dividend does not exceed taka 25000. So if the income from dividend of a mutual fund is less than 25000 then there is no tax on that but if it exceeds 25000tk then the total income is taxable.

Mobile phone operator companies

Types of Income Tax Rate

1. Capital gain from:

Transfer of stocks & shares of non-listed private limited company 10%
Transfer of other capital assets 15% 2. Dividend income 20%

|Income from Dividend |U/S 54 |Resident/non-resident Bangladeshi Company @ 20% |
| | |Resident/non-resident Bangladeshi Person other than Company @ 10% |

For example: In EPZ there is Korean company. If Korean company gives dividend, that dividend is not taxable is Bangladesh, it is taxable in Korea.

Also he is given stock dividend. According to the definition of income, it is said that stock dividend is not an income.

Other Industrial Companies:

|Types of Income |Tax Rate |
|Capital gain from: | |
|Transfer of stocks & shares of non-listed private limited company |10% |
|Transfer of other capital assets |15% |
|Dividend income |20% |
|Other income | |
|Publicly traded company | |
|Dividend declared by less than 10% or failure to pay declared dividend within SEC stipulated time (30 days from 9.2.10) | |
|Other situation | |

3. Other income

Company being converted into a publicly traded through transfer of at least 10% shares through stock exchanges, of which maximum 5% may be through- Pre-IPO Placement Tax rate is 35% Other company Tax rate is 45%
Minimum Tax irrespective of profit or loss: Taka 5,000

Non-Corporate Taxpayers:

Resident individual assessee, non-resident Bangladeshi, association of persons, firm and other artificial juridical persons

5% tax on Capital gain on transfer of shares of:
|a sponsor shareholder or director of a listed company [source tax u/s 53M and settled tax u/s 82C] |
|a sponsor shareholder or director of bank, financial institution, merchant bank, insurance company, leasing company, portfolio management |
|company and stock dealer company [proposed] |
|other shareholder or director of a listed company having more than 10% of share capital of a company at any time in income year [proposed] |

Placement Shareholder: (106: Transfer of Government)
Types of Income Tax Rate

Capital gain from transfer of shares of listed company [proposed] 10%

If a company raises its share capital through book building 3%
Or, public offering or rights offering or private placement or preferential share or in any other way, at a value in excess of face value [sec. 16E]
(Source tax u/s 53L and settled tax u/s 82C)

Tax Rebate for investment:

Amount of allowable investment is either actual investment in a year or up to 20% of total income or Tk. 100, 00,000/- whichever is less. Tax rebate amounts to 10% of allowable investment. Types of investment qualified for the tax rebate are:

▪ Life insurance premium , ▪ Contribution to deferred annuity , ▪ Contribution to Provident Fund to which Provident Fund Act, 1925 applies , ▪ Self contribution and employer's contribution to Recognized Provident Fund , ▪ Contribution to Super Annuation Fund , ▪ Investment in debenture or debenture stock, Stocks or Shares, acquired through Initial Public Offering (IPO), ▪ Contribution upto Tk 60,000 to deposit pension scheme sponsored by any scheduled bank, ▪ Contribution to Benevolent Fund and Group Insurance premium , ▪ Contribution to Zakat Fund , ▪ Donation to charitable hospital approved by National Board of Revenue , ▪ Donation to philanthropic or educational institution approved by the Government , ▪ Donation to socio-economic or cultural development institution established in Bangladesh by Aga Khan Development Network ,

Investing in the Stock Market for non-residents in Bangladesh:

Foreign investors are allowed to participate in initial primary offerings (IPOs) without any regulatory restrictions. Also, incomes from dividends are tax-exempt for investors

Investment in shares/securities by non-residents:

a) Non-residents are free to invest in shares / securities quoted in the stock exchanges, with foreign exchange sent or brought into Bangladesh.

b) They may also invest in new, yet-to-be-listed public issues of Bangladeshi shares/securities. In such cases investors are not required to transact through any registered broker/member of stock exchange. 5% shares of Initial Public Offering (IPO) of a company are reserved for Non-Resident Bangladeshi (NRB). Non-Resident Bangladeshi (NRB) can purchase/subscribe securities in foreign currency through "Foreign Currency Account for IPO" opened for the purpose only by the issuing company. Over subscription can be repatriated after completion of formalities.

c) Permission of Bangladesh Bank is not required for issue and transfer of shares in favour of non-residents against their investments in joint ventures in Bangladesh.

d) Non-resident share holders can freely transfer their shares to other non-residents.

Deduction of tax from dividends:
(1) The principal officer of a company registered in Bangladesh, or of any other company, shall, subject to the provisions of sub-section
(2), at the time of paying any cash dividend to a shareholder, deduct tax on the amount of such dividend, in the case of:
(a) a non-resident other than non-resident Bangladeshi,
(i) if the shareholder is a company, at the rate applicable to a company;
(ii) if the shareholder is a person other than a company, at the maximum rate;
(b) resident or a non-resident Bangladeshi,—
(i) if the shareholder is a company, at the rate applicable to a company;
(ii) if the shareholder is a person other than a company, at the rate of ten per cent.;
(2) Where, the Deputy Commissioner of Taxes, on an application made in this behalf, issues a certificate to a non-resident share holder, not being a company, is liable to tax at the rate less than the maximum rate, the payment of the dividend to the non resident share holder shall be made without any deduction of tax or at a rate less than the maximum rate specified in sub-section (1), as the case may be.

Collection of tax from stock exchange transactions.-
(1) The Securities and Exchange Commission or stock exchange, as the case may be, shall deduct or collect tax in the following cases in the following rate:
|Sl. |Case |Rate |Time for |From whom tax |
|No. | | |deduction or |to be deducted |
| | | |collection | |
|(i) |Where a company |three per |determined |the company |
| |listed with stock |cent on the |by the |selling the share |
| |exchange, sales its |difference |Securities and | |
| |share at price in |between the |Exchange | |
| |excess of its face |sold price |Commission | |
| |value |and face | | |
| | |value | | |
|(ii) |Where sponsor |five per cent |at the time of |sponsor |
| |shareholder or director or |on the difference |transfer or declaration of |shareholder or director |
| |placement holder of |between |transfer or |or |
| |a company or |transfer |according |placement |
| |sponsor or |value and |consent to |holder of a |
| |placement holder of |cost of |transfer of |company or |
| |a mutual fund listed |acquisition |securities or |sponsor or |
| |with a Stock | |mutual fund |placement |
| |Exchange transfer | |units |holder of a |
| |its share or mutual | | |mutual fund |
| |fund unit. | | |transferring such |
| | | | |share or fund |
| | | | |unit. |
|(iii) |Where a member of |zero point |at the time of |member of Stock |
| |a Stock Exchange |one zero per |payment or |Exchange |
| |transacted |cent |receipt for |transacting such |
| |securities of a |(0.10%) on |such |securities. |
| |company listed |the value of |transaction | |
| |with Stock |securities | | |
| |Exchange. |transacted | | |

(2) For the purpose of this section —

(i) transfer includes transfer under a gift, bequest, will or an irrevocable trust;

(ii) transfer value‖ of a security or a mutual fund unit shall be deemed to be the closing price of securities or mutual fund units prevailing on the day of consent accorded by the Securities and Exchange Commission or the Stock Exchange, as the case may be, or where such securities or mutual fund units were not traded on the day such consent, was accorded, the closing price of the day when such securities or mutual fund units were last traded.

Major changes for Tax incentives in the Stock Market for 2012:

(a) Withdrawal of the tax exemption facility of non-resident earning capital gain from sale of listed company’s share [Section 31(proviso)]

Any gain from sale of shares of listed companies was tax free in the hand of non-resident as per proviso of section 31.It is now taxable because the proviso has been deleted.

(b) Disclosure of undisclosed income if it is invested at shares of listed companies paying 10% tax

No question will be raised by the tax department regarding the source of money if it is invested at shares of listed companies paying tax @10%

(c) Enhancement of the rate of tax deduction from the brokerage house [Section 53BBB]

The rate of tax to be deducted at source has been raised from 0.05% to 0.10%

Current Condition of Fiscal Environment of Stock Market in Bangladesh:

The market crash of 2010 drew greater degree of attention because much larger segments of population spreading all around the country are affected this time as the market in this period has gained significant growth. The securities market debacle in 2010 need to be viewed from different perspectives. The stock market crash reveals structural weaknesses of the market. This leads to all concerned feeling the agenda for market reforms.

The bullish capital market turned bearish during 2010, with the exchange losing 1,800 points between December 2010 and January 2011. Millions of investors have been rendered bankrupt as a result of the market crash. The crash is believed to be caused artificially to benefit a handful of players at the expense of the big players. Current Bangladesh share market can experience huge decline because of: a) Most of the share prices are very high (lack support of fundamentals). B) People who are involved in the market has egger to make quick profit by short trading only. Most of them do not want to hold shares for little long. C) Excess liquidity in the market also pushing share prices without solid reason (only speculation).Manipulators are active! d) Our banking other financial institutions has exposed it selves to very much risk (By involving speculative share trading now).When the market will down turn or crash they will in serious trouble (Bangladesh Bank must see this matter). Last but not least, serious act with prudence to strengthen our share market and beware of manipulators. And the government of Bangladesh may be under pressure to intervene in order to protect the hard earned money of the small investors from being lost due to this unusual crash of the stock market. So, this is the right time to work together (Government as well as other financial institutes) to decide what actions to take to save the market from further falls.

Bibliography:

http://www.thefinacc.com/?p=185

http://www.taxrates.cc/html/bangladesh-tax-rates.html

National Board of Revenue, Bangladesh, Official Website

Board of Investment Bangladesh

www. Wickipedia.com

http://boi.gov.bd/how-to-invest/investment-incentives

CORPORATE TAXATION IN BANGLADESH

Corporate Taxation: Brief Review
Corporate tax or company tax refers to a tax imposed on entities that are taxed at the entity level in a particular jurisdiction. Corporations may be taxed on their incomes, property, or existence by various jurisdictions. The tax is generally is imposed on net taxable income. Net taxable income for corporate tax is generally financial statement income with modifications, and may be defined in great detail within the system. The rate of tax varies by jurisdiction. The tax may have an alternative base, such as assets, payroll, or income computed in an alternative manner.

Statutory Definition of Company:
Under Section 2(20), Company means a company as defined in the companies Act, 1913 (vii of 1913) or company act 1994 and includes – a) A body corporate established or constituted by or under any law for the time being in force; b) Any nationalized banking or other financial institution, insurance body and industrial or business enterprise; bb) an association or combination of persons, called by whatever name, if any of such persons is a company as defined in the companies act, 1913 (vii of 1913) or company act,1994.c) Any foreign association or body not incorporated by or under any, which the board may, by general or special order, declare to be a company for the purposes of this ordinance.

Residential Status of Company:
Residential status may be resident [defined u/s 2(55), ITO] or non-resident [defined u/s 2(42), ITO]. Under section 17, resident assessee (taxpayer) has to pay income tax on total global income including foreign income, but non-resident taxpayer has to pay income tax only on his total domestic (Bangladeshi) income as determined u/s 18 (income deemed to accrue or arise in Bangladesh). Under section 2(55), A company will be a resident, if control and management of its affairs situated wholly in Bangladesh in the concerned income year. Otherwise, a taxpayer will be treated as non-resident [u/s 2(42)]

When the company pays tax:
For company, they have obligation advance quarterly tax payment. If they have total income of 400000 tk., then they have to pay advance tax, (Sec 68). And the regular payment is before filing the return. Its’ obligation is 15th July or within 6 months before the income year ends whichever is earlier. But maximum companies follow the financial year, because in 15th July the account has not closed yet. For this, there is opportunity to take time.

In Bangladesh, the number of corporate tax payers is. The majority comes from the small number of foreign companies. The corporate tax in Bangladesh is 0 to 45 percent in fiscal year 2011 while it was 42.5 percent in the year 2010. The rate of top corporate tax is 45 percent that is paid by banks, insurance and financial companies. However, publicly traded companies registered in Bangladesh are targeted to charge a lower rate of 27.5 percent as corporate tax. All other companies are taxed at 37.5 percent in calendar year 2011. A value-added tax (VAT) of 15% is levied on all important consumer goods.

Corporate Taxation in Bangladesh

In Bangladesh, the principal direct taxes are personal income taxes and corporate income taxes, and a value-added tax (VAT) of 15% levied on all important consumer goods. The top income tax rate for individuals is 25%. For the 2004/05 tax year (July 1 2004–June 30 2005) the top corporate rate was 45%. However, publicly traded companies registered in Bangladesh are charged a lower rate of 30%. Banks, financial institutions and insurance companies are charged the 45% rate. All other companies are taxed at the 37.5% rate. Effective 1 July 2002, the VAT rate on computer hardware and software was reduced to 7.5%, and certain agricultural equipment and electricity supplied to the agricultural sector was exempted from VAT altogether. VAT on the transfer of land is also to be abolished. Essential agricultural implements and irrigation pumps had previously been excluded from certain taxes.

In Bangladesh, company income is taxed twice, once tax is paid by the company on its profit, and then again it is slapped on the shareholders who receive dividends out of such profits at rates applicable on them. Companies are required to deduct income tax at 10% on dividends paid to its shareholders. Bangladesh tax rates rank among the highest in the world.

Basis: Resident Entities are taxed on world-wide business income. Non-residents pay tax only on Bangladesh source income.

Taxable Income:
Business Income is taxed under the following heads of Income: Business Incomes, Capital Gains and Other Incomes. Net Taxable Income is calculated on the basis of specific rules and principles and expenses may be deducted from gross income.
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If any publicly traded company (excluding Mobile Operator Company) declares more than 20% dividend, 10% rebate on total tax allowed.
The standard rate of corporate tax in Bangladesh is 27.5% in 2010 - 2011 tax years. This is the standard corporate tax rate applicable to publicly traded companies in Bangladesh, a list including tax rates for other corporations are as follows:

|Company/business |Rate |Condition/rebate |
|a. For publicly traded companies (except |27.5% |a. Any listed company declares dividend at 20%, or higher, will benefit from tax |
|bank, insurance, leasing & other financial| |abatement at 10%. |
|institutions) | |b. Any listed company which declares a dividend at 10% or lower, or does not |
| | |distribute a dividend by the date declared by the SEC*, will be required to pay |
| | |tax at 37.5%. |
|b. For non-publicly traded companies |37.5% | |
|(except bank, insurance, leasing & other | | |
|financial institutions) | | |
|c. Bank, insurance, leasing & other |45% | |
|financial institutions | | |
|d. For mobile phone operator companies |45% |If the mobile phone operator company transforms to a publicly traded company |
| | |offering at least 10% of paid up capital in an IPO, then the tax rate will be 35%.|
|e. Dividend or profit withholding |15% |For foreign investment, it is based on existence of a bilateral tax convention |
| | |with the investors' country. |
|f. Expatriates in Bangladesh (Not NRBs**) |25% | |
|Minimum corporate tax | |Tk. 5,000 |

Any income collected or gained by a company doing business in Bangladesh, whether resident or not is taxable. Corporate tax rates for industrial companies whose shares are publicly traded are 35% and the rate of those whose shares are not publicly traded is 40%.
A tax rate on income of all other companies including banks, financial institutions, insurance companies and local authorities is 45%. Companies enjoying tax holiday are required to invest only 25% to 30% of their income in other activities as per rules of the National board of Revenue (NBR).

Exemption of Dividend from Mutual Fund or Unit Fund:
Any income from dividend of a mutual fund or a Unit fund where such dividend does not exceed taka 25000 is exempted. So if the income from dividend of a mutual fund is less than 25000 then there is no tax on that but if it exceeds 25000tk then the total income is taxable.

Mobile phone operator companies

Types of Income Tax Rate

1. Capital gain from:

3. Transfer of stocks & shares of non-listed private limited company 10%
4. Transfer of other capital assets 15% 2. Dividend income 20%

|Income from Dividend |U/S 54 |Resident/non-resident Bangladeshi Company @ 20% |
| | |Resident/non-resident Bangladeshi Person other than Company @ 10% |

For example: In EPZ there is Korean company. If Korean company gives dividend, that dividend is not taxable is Bangladesh, it is taxable in Korea.

Also he is given stock dividend. According to the definition of income, it is said that stock dividend is not an income.

Other Industrial Companies:

|Types of Income |Tax Rate |
|Capital gain from: | |
|Transfer of stocks & shares of non-listed private limited company |10% |
|Transfer of other capital assets |15% |
|Dividend income |20% |
|Other income | |
|Publicly traded company | |
|Dividend declared by less than 10% or failure to pay declared dividend within SEC stipulated time (30 days from 9.2.10) | |
|Other situation | |

3. Other income

Company being converted into a publicly traded through transfer of at least 10% shares through stock exchanges, of which maximum 5% may be through- Pre-IPO Placement Tax rate is 35% Other company Tax rate is 45%

Avoidance of double taxation agreement
There are agreements on avoidance of double taxation between Bangladesh and 28 countries which are:-
(1) United Kingdom of Great Britain and Northern Ireland, (2) Singapore (3) Sweden (4) Republic of Korea (5) Canada (6) Pakistan (7) Romania (8) Sri Lanka (9) France (10) Malaysia (11) Japan (12) India (13) Germany (14) The Netherlands (15) Italy (16) Denmark (17) China (18) Belgium (19) Thailand (20) Poland (21) Philippines (22) Vietnam (23) Turkey (24) Norway (25) USA (25) Indonesia (27) Switzerland (28) Oman

Tax Holiday
Tax holiday is allowed for certain industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions. If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is allowed.

Tax Withholding Functions
In Bangladesh withholding taxes are usually termed as Tax deduction and collected at source. Under this system both private and public limited companies or any other organization specified by law are legally authorized and bound to withhold taxes at some point of making payment and deposit the same to the Government Exchequer. The taxpayer receives a certificate from the withholding authority and gets credits of tax against assessed tax on the basis of such certificate.

Tax Rebate for Investment
Rate of Rebate: Amount of allowable investment is either up to 25% of total income or BDT 500,000 whichever less is. Tax rebate amounts to 10% of allowable investment. Types of investment qualified for the tax rebate are: Life insurance premium; Contribution to deferred annuity; Contribution to Provident Fund to which Provident Fund Act, 1925 applies; Self contribution and employer's contribution to Recognized Provident Fund; Contribution to Super Annulations Fund; Investment in approved debenture or debenture stock, Stocks or Shares; Contribution to deposit pension scheme; Contribution to Benevolent Fund and Group Insurance premium; Contribution to Zakat Fund; Donation to charitable hospital approved by National Board of Revenue; Donation to philanthropic or educational institution approved by the Government.

Major Income Tax Features change; Budget 2011-2012, Bangladesh:

Tax rebate@10% on tax payable has been withdrawn for showing at least 10% higher income than last year for those who paid tax at 25% slab last year. ▪ Minimum tax for companies on the basis of gross receipt [Section 16CCC]
Minimum tax payable by the company irrespective of earning profit or incurring loss is 0.50% of gross receipt. If there is no receipt then the question of minimum tax will not arise. Previously minimum tax was Tk.5,000/= ▪ Special higher tax rate for tobacco manufacturing company. [Finance Act 2011]
Special higher tax at 42.5% will be payable for non-listed tobacco manufacturing company. However the rate will be 35% if the company is listed ▪ 5% reduced tax rate on fisheries for all types of assessee irrespective of company or individual [6th schedule (Part-A) Para-34, Para-42 and SRO.....]
Income from fisheries, poultry etc. is tax free up to 30/06/2011 as per 6th schedule (Part-A) Para-34.This period is extended for poultry business only up to 30/06/2013 through insertion of Para 42. Any such income other than poultry after 30/06/2011 would be taxable at a reduced rate of 5%. ▪ Tax holiday facility is extended for further 2 years (from 01/07/2011 to 30/06/2013) with 1 new condition that minimum paid up capital would be Tk. 20,00,000/ in place of Tk. 10,00,000/.No tax holiday for industries set-up at any area of the following districts: Dhaka, Narayangonj, Gazipur and Chittagong
The type of industries also re-shuffled. The following categories of industries are now eligible for tax holiday:
Active pharmaceuticals ingredient industry and radio pharmaceuticals industry; Barrier contraceptive and rubber latex; Basic chemicals or dyes and chemicals; Basic ingredients of electronic ind. (e.g. resistance, capacitor, transistor, integrator, circuit); Bio-fertilizer; Biotechnology; Boilers; Compressors; Computer hardware; Energy efficient appliances; Insecticide or pesticide; Petro-chemicals; Pharmaceuticals; Processing of locally produced fruits and vegetables; Radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or preservation of food or disinfecting medicinal equipment); Textile machinery; Tissue grafting; or Any other category of industries as the Govt. may notify in the official Gazette.
The following categories of infrastructure are within the meaning of Physical infrastructure facility:- Deep sea port; Elevated expressway; Export processing zone; Flyover; Gas pipe line; Hi-tech park; Information and Communication Technology(ICT) village or software technology zone; Information Technology (IT) Park; Large water treatment plant and supply through pipe line; Liquefied Natural Gas terminal and transmission line; Mono-rail; Rapid transit; Renewable energy (e.g. energy saving bulb, solar energy plant, windmill); Sea or river port; Toll road; Underground rail; Waste treatment plant; or Any other category of industries as the Govt. may notify in the official Gazette,

▪ Extension of tax exempted income of software development and information technology enabled services (ITES) for another 2 (two) years [6th Schedule (Part-A) Para 33]. Presently income from software development and information technology enabled services (ITES) is totally tax free up to 30/06/2011. This benefit is also extended for another 2 years. ▪ If any company receives any loan from any other company without crossed cheque or bank transfer then it will be treated as income under the head income from other source as per newly inserted sub section 26 of section 19 ▪ Deemed income in the hand of a company purchasing car or jeep value of which exceeds 10% of its paid up capital [Section 19(27)]
If any company purchases directly or at hire purchase system any car or jeep value of which exceeds 10% of its paid up capital then 50% of the amount that exceeds 10% of paid up capital will be treated as income under the head income from other sources as per newly inserted sub section 27 of section 19 ▪ Change the tax exemption system and period of EPZ industries
Ten (10) years automatic tax exemption system of EPZ industries has been replaced by the following exemption system for industries set up from 01/01/2012
|SL |Year of exemption |Tax exemption |
| |1st two (2) years |100% |
| |Next two (2) years |50% |
| |Next one (1) year |25% |

▪ Corporate Social Responsibility (CSR) There was no ceiling of expenditure at CSR. Now the ceiling has been fixed at Tk. eight (8) crore or 20% of total income whichever is lower. 10% tax rebate will be applicable on that amount. Moreover area of CSR has been re-shuffled and 3 more area included in it:
(a) Donation to national level institution set up in memory of the liberation war
(b) Donation to national level institution set up in memory of Father of the Nation
(c) Donation to Prime Minister’s Higher Education Fund ▪ Withdrawal of the exemption from interest on Wage Earner Development Bond

Interest on Wage Earner Development Bond was tax free as per SRO no. 160 dated 25/05/1981. This SRO is withdrawn through SRO no. ….. Dated 01/07/2011

▪ Withdrawal of the reduced tax rate of new industries Reduced tax rate was applicable as per SRO no. 172 dated 30/06/2009 for newly setup industries not enjoying tax holiday or accelerated depreciation. ▪ Extension of the reduced tax rate facility of 15% for another 2 years for both textile and jute industries
The reduced tax rate facility of 15% is extended for another two (2) years i.e. up to 30/06/2013 for both textile and jute industries. ▪ Raising the amount of tax from 200% to 1,000% in case of legalizing the investment at bus, minibus, coaster, truck etc. without raising any question No question will be raised as to the source of purchase price if assessee pays tax @1,000% of tax to be paid per year per bus, minibus, coaster, truck etc. (instead of 200% in the earlier year) ▪ Increasing the presumptive tax rate of water vessel, cargo, Dump barge etc.

Bibliography:

http://www.thefinacc.com/?p=185

http://www.taxrates.cc/html/bangladesh-tax-rates.html

National Board of Revenue, Bangladesh, Official Website

Board of Investment Bangladesh

www. Wickipedia.com