ACC 303 SEC A & B, TAXATION CLASS LECTURE FOR NEXT WEEK

Tax System of BangladeshTax System of BangladeshLecture - 3Lecture - 3

1@ Mohd.Rajiv Iqbal

Tax System of BangladeshTax System of Bangladesh

Tax system of Bangladesh is based on multiple tax system. Several kinds of taxes are in existence. Among these taxes, the contribution of indirect taxes to the exchequer is quite significant.

Direct taxes consist mainly of income tax and land tax etc. whereas indirect taxes consist of import –export duty, value added tax, motor vehicle tax, excise duty, etc.

@ Mohd.Rajiv Iqbal 2

Proportion of direct and Proportion of direct and indirect taxindirect tax

Particular 2006-07(BDT in Crore)

2007-08(BDT in Crore)



Total Revenue 53542 60539 69382 79461Tax Revenue 42915 48012 65789 63955Percentage of Tax to Revenue

81.68% 79.31% 81.85% 80.48%

Direct Tax 8915 11500 13604 17220Percentage of Direct Tax to Total Tax

20.77% 23.95% 23.95% 26.92%

Indirect Tax 34000 36512 43185 46735Percentage of Indirect Tax to Total Tax

79.23% 76.05% 76.05% 73.08%


Particular 2006-07(BDT in Crore)




Income Tax 8500 11005 13054 16560Import and Export Duty 9485 9300 10862 10430Excise Duty 185 213 251 261Value Added Tax (VAT) 14729 17013 20249 22795Supplementary Duty 7701 7970 9528 10485Motor Vehicles Tax 382 495 550 660Land Revenue 415 364 424 490Non Judicial Stamp 1013 1133 1265 1750Others 505 519 606 524Total 42915 48012 56789 63955

@ Mohd.Rajiv Iqbal

List of Different Taxes List of Different Taxes

4

Taxes that are in existence in Taxes that are in existence in Bangladesh tax system Bangladesh tax system

Income Tax: Income tax is one of the main sources of revenue in Bangladesh. It is a progressive tax system. Bangladesh Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more tax he should pay. This is the basic principle of charging income tax in Bangladesh. The tax system aims at ensuring equity and social justice. Tax rates in Bangladesh also differs between male and female individuals. The tax rate is static on company which however, vary with the classification of company.

Bangladesh Income Tax Rates:

Bangladesh personal income tax rates for assessment year 2010 - 2011 is progressive up to 25%.


Bangladesh Income Tax Rates for individuals other than female taxpayers, senior taxpayers of 65 years and above and retarded taxpayers - Assessment Year 2010 –11

First BDT 0 - 180000 NilNext BDT 180001 - 480000 10%Next BDT 480001 - 880000 15%Next BDT 880001 - 1180000 20%Rest Amount BDT 1180001+ 25%

Bangladesh Income Tax Rates for female taxpayers, senior taxpayers of age 65 years and above - Assessment Year 2010 – 2011

First BDT 0 - 200000 NilNext BDT - 200001 - 500000 10%Next BDT 500001 - 900000 15%Next BDT 900001 - 1200000 20%Rest Amount BDT 1200001+ 25%

@ Mohd.Rajiv Iqbal

Taxes that are in existence in Bangladesh Taxes that are in existence in Bangladesh tax system (Cont.) tax system (Cont.)

6

Bangladesh Income Tax Rates for retarded /handicapped taxpayers - Assessment Year 2010 - 2011

First BDT 0 - 250000 NilNext BDT 250001 - 550000 10%Next BDT 550001 - 950000 15%Next BDT 950001 - 1250000 20%Rest Amount BDT 1250001+ 25%

Minimum tax for any individual assessee is Tk. 2,000

Non-resident Individual: 25% (other than non-resident Bangladeshi)

On Dividend income: 20%

@ Mohd.Rajiv Iqbal


7

Bangladesh Corporate Tax Rates:The standard rate of corporate tax in Bangladesh is 27.5% in

2010 - 2011 tax year. 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:

Publicly Traded Company 27.5%Non-publicly Traded Company 37.5%Bank, Insurance & Financial Company 42.5%Mobile Phone Operator Company 45%Publicly Traded Mobile Operator Company 35%

If any publicly traded company (excluding Mobile Operator Company) declares more than 20% dividend, 10% rebate on total tax allowed.

@ Mohd.Rajiv Iqbal


8

Wealth Tax: It is direct tax based on the wealth of an assessee and charged under Wealth Tax Act, 1963. Person whose wealth exceeds BDT. 25 lakh was subject to tax under this Act. As the revenue from this Act was negligible, it has been suspended from the year 1999.

Gift Tax: A person making gift to another over BDT 20000 is considered assessee under Gift Tax Act, 1963 and chargeable for gift tax. It is a direct tax. This tax was suspended in 1985 but, again, revived in 1990 and has been renamed as Gift Tax Act, 1990.

Value Added Tax (VAT): It is the tax imposed on the added value of the product at different stages in the marketing chain. Added value is the difference between production/purchase cost over sale value at a point. VAT is charged on the added value at a static rate. It is an indirect tax and the Government of Bangladesh currently earns huge amount tax revenue from it. The current General VAT rate is 15%.

@ Mohd.Rajiv Iqbal


9

Import-Export Duty: It is commercial duty charged on the import and export of commodities. It is an indirect tax the ultimate burden of which is shifted to consumer. Government of Bangladesh earns a significant amount of tax revenue from it.

Land Revenue: This is direct tax imposed on the land property of the assessee.

Motor Vehicle Tax: This tax is imposed on the capacity of motor vehicle and rout permit. Though the revenue from this source is small yet it is considered a potential source and earning

@ Mohd.Rajiv Iqbal


10

ACC 303 SEC A & B, TAXATION CLASS LECTURE FOR NEXT WEEK

Documents

Transcript of ACC 303 SEC A & B, TAXATION CLASS LECTURE FOR NEXT WEEK