Bangladesh Tax System Analysis 2020

Bangladesh Tax System Analysis, 2020

This article provides a comprehensive analysis of Bangladesh's tax regime in 2020. It covers corporate income tax, value added tax, withholding tax, transfer pricing rules, and customs duties, and summarizes practical tax savings strategies that Korean companies should consider.

Bangladesh's tax administration is managed by the National Board of Revenue (NBR), with core laws including the Income Tax Ordinance 1984 and the VAT and Supplementary Duty Act 2012. Firms operating in economic zones can access separate incentive packages that differ from the standard rates.

25~32.5%

Corporate Tax

by entity type

15%

VAT

standard rate

10~20%

Withholding

by payment type

20%

Dividend Tax

for non-residents

15%

Capital Gains Tax

gains tax

0~25%

Customs Duty

by product class

10 years

Free Trade Zone

BEZA/BEPZA

Tax Treaties

DTA

Corporate Tax Details

Bangladesh Corporate Tax Rates (FY2020-21)

Entity Type	Tax Rate	Criteria	Notes
Private Limited Companies	32.5%	general	includes foreign-owned entities
Listed Companies	25%	stock exchange listed	2.5% discount
Banks and Insurance	37.5~40%	industry-specific	highest rate band
Ready-Made Garments	12%	exports >80% of turnover	incentive rate
Economic Zones	0%	first 10 years	BEZA/BEPZA

VAT and Withholding Tax

VAT

Standard Rate15%

Reduced Rates5~10% (selected items)

Exemptionsessential and export goods

Filingmonthly (15th each month)

Withholding Tax

Service Fees10% (non-residents)

Royalties20% (non-residents)

Interest20% (non-residents)

Technical Fees20% (non-residents)

Tax Optimization Strategies for Korean Firms

Use the Korea-Bangladesh DTA

Under the Korea-Bangladesh Double Taxation Avoidance Agreement, dividend withholding can be reduced to the treaty rate of 10%. Interest and royalty payments can also benefit from the 10% treaty rate, which is generally better than the domestic 20% rate. A Tax Residency Certificate must be submitted for DTA application.

Maximize Economic Zone Incentives

Companies admitted to BEZA or BEPZA can receive 10 years of corporate tax exemption, duty exemptions for imported machinery and inputs, and VAT relief on qualifying exports. Reinvest profits earned during the exemption period to scale operations and shift to a phased 50% tax allowance over the three years following the exemption period.

Transfer Pricing Compliance

Bangladesh has operated transfer pricing rules since 2014. Transactions with Korean headquarters should follow the Arm’s Length Principle, and firms should prepare annual transfer pricing documentation. Advance Pricing Agreements are not yet implemented in Bangladesh, so proactive documentation is essential.

Tax Risk Management

To prepare for regulatory uncertainty such as frequent audits, discretionary interpretation, and refund delays, engage a qualified local tax advisor under an annual service arrangement. Use Advance Ruling procedures at NBR where possible to reduce uncertainty and manage investigations and refunds more predictably.

Tax Compliance Flow

Bangladesh Tax Compliance Workflow

Get a TIN

NBR tax registration

→↓

Tax Advisory

local legal entity

→↓

Filing & Payment

corporate tax and VAT

→↓

Apply DTA

use treaty rates

→↓

Audit Support

response and refund handling

Korean firms can significantly reduce effective tax burdens by systematically applying DTA benefits and economic zone incentives. Early preparation of documentation and partnerships with experienced tax advisers is critical to implementation stability.

Company Registration GuideReview the full company establishment process in Bangladesh for 2020

Investment Incentive OverviewReview Bangladesh investment incentive programs in detail

Bangladesh Tax System Analysis 2020