Global Tax Alert | 28 June 2013

Bangladesh announces 2013-14 budget proposals

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On 6 June 2013, the Bangladesh government announced its budget for the fiscal year 2013/14. This Alert outlines the key proposals.

Increase in tax rates

  • 0.5% minimum tax on gross receipts applicable to business entities.
  • 5% tax rate increase from 35% to 40% for publicly traded cigarette manufacturing companies.
  • 2.5% increase from 42.5% to 45% for non-publicly traded cigarette manufacturing companies.
  • 5% tax increase from 35% to 40% for publicly traded mobile phone companies.
  • 15% (as compared to 10%) withholding tax rate applicable, if no taxpayer identification number is provided for a payment of fees for professional and technical services.
  • 4% tax collection rate increase from 6% to 10 % on cigarette manufacturers.

Reduction in tax rates

  • 2% tax rate reduction from 5% to 3% applicable to the hatchery and dairy industry.
  • Elimination of the tax collection tax on the premium over the face value of share of a company.1
  • Elimination of tax collection on bond sales.

Other changes

  • 15% tax rebate for investments in private mutual funds.
  • Extension of the 15% concessionary tax for the jute and textile sector to June 2015.
  • Extension of the setup period of area based incentives/exemptions for certain specified new industrial undertakings and newly established physical infrastructure facilities to June 2015.
  • Extension of the 15% tax on income derived from the production of jute goods, fabric and dying to June 2015.
  • Extension of the 50% tax rebate on the export of handicrafts and the tax exemption in the poultry sector to June 2015.

Endnote

1. Under the current law, when a company raises its share capital through book building, public offering, rights offering, etc., at a value in excess of face value of the share, a 3% withhold tax is imposed on the difference between the sales price and its face value.

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (India), Kolkata
  • Dinesh Agarwal
    +91 33 6615 3470
    dinesh.agarwal@in.ey.com
  • Rohit Bothra
    +91 33 6615 3581
    rohit.bothra@in.ey.com
Ernst & Young LLP, Asia Pacific Business Group, New York
  • Chris Finnerty
    +1 212 773 7479
    chris.finnerty@ey.com
  • Jeff Hongo
    +1 212 773 6143
    jeff.hongo@ey.com
  • Kaz Parsch
    +1 212 773 7201
    kazuyo.parsch@ey.com
  • Bee-Khun Yap
    +1 212 773 1816
    bee-khun.yap@ey.com

EYG no. CM3575