The National Board of Revenue (NBR) is the central authority for tax administration in Bangladesh.

It was established by President's Order No. 76 of 1972. Administratively, it is under the Internal Resources Division (IRD) of the Ministry of Finance (MoF). MoF has 3 Divisions, headed by 3 permanent Secretaries to the Government, namely, the Finance Division the Internal Resources Division (IRD) and the Economic Relations Division (ERD). The Secretary, IRD is the ex-officio Chairman of NBR. NBR is responsible for formulation and continuous re-appraisal of tax-policies and tax-laws, negotiating tax treaties with foreign governments and participating in inter-ministerial deliberations on economic issues having a bearing on fiscal policies and tax administration. The main responsibility of NBR is to collect domestic revenue (primarily, Import Duties and Taxes, VAT and Income Tax ) for the government. Other responsibilities include administration of all matters related to taxes, duties and other tax producing fees. Under the overall control of IRD, NBR administers the Excise, VAT, Customs and Income-Tax services consisting of 3434 officers of various grades and 10195 supporting staff positions (Approved set up as on 09 Feb., 2000 AD).

National Board of Revenue, Bangladesh

The National Board of Revenue (NBR) is the central authority for tax administration in Bangladesh. Administratively, it is under the Internal Resources Division (IRD) of the Ministry of Finance (MoF). MoF has 3 Divisions, namely, the Finance Division the Internal Resources Division (IRD) and the Economic Relations Division (ERD). Each division is headed by a Secretary to the Government. Secretary, IRD is the exofficeo Chairman of NBR. NBR is responsible for formulation and continuous re-appraisal of tax-policies and tax-laws in Bangladesh. Negotiating tax treaties with foreign governments and participating in inter-ministerial deliberations on economic issues having a bearing on fiscal policies and tax administration are also NBR's responsibilities. The main responsibility of NBR is to mobilize domestic resources through collection of import duties and taxes, VAT and income tax for the government. Side by side with collection of taxes, facilitation of international trade through quick clearance of import and export cargoes has also emerged as a key role of NBR. Other responsibilities include administration of matters related to taxes, duties and other revenue related fees/charges and prevention of smuggling. Under the overall control of IRD, NBR administers the excise, VAT, customs and income-tax services consisting of 3434 officers of various grades and 10195 supporting staff positions.

Income Tax at a Glance Among direct taxes, income tax is one of the main sources of revenue. It is a progressive tax system. Income tax is imposed on the basis of ability to pay. The more a taxpayer

earns the more he should pay''- is the basic principle of charging income tax. It aims at ensuring equity and social justice. Income Tax Authorities: Income Tax Authorities are :

National Board of Revenue, Director General of Inspection (Tax), Commissioner of Taxes (Appeals), Commissioner of Taxes (LTU) Director General (Training), Director General Central Intelligence Cell (CIC), Commissioner of Taxes, Additional Commissioner of Taxes (Appeal/Inspecting), Joint Commissioner of Taxes(Appeal/Inspecting ), Deputy Commissioner of Taxes, Assistant Commissioner of Taxes, Extra Assistant Commissioner of Taxes, Inspectors of Taxes.

Sources of Income: For the purpose of computation of total income and charging tax thereon, sources of income can be classified into 7 categories, which are as follows :

Salaries Interest on securities Income from house property Income from agriculture Income from business or profession Capital gains Income from other sources.

Tax Rate (Assessment Year- 2008-09) : Other than Company : For individuals other than female taxpayers, senior taxpayers of 70 years and above and retarded taxpayers, tax payable for the First Next Next Next Rest Amount 1,65,000/2,75,000/3,25,000/3,75,000/Nil 10% 15% 20% 25%

For female taxpayers, senior taxpayers of age 70 years and above and retarded taxpayers, tax payable for the First Next Next Next Rest Amount 1,80,000/2,75,000/3,25,000/3,75,000/Nil 10% 15% 20% 25%

Minimum tax for any individual assessee is Tk. 2,000 Non-resident Individual 25% (other than non-resident Bangladeshi) For Companies Publicly Traded Company Non-publicly Traded Company Bank, Insurance & Financial Company Mobile Phone Operator Company 27.5% 37.5% 45% 45%

If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is allowed. Tax Rebate for investment : Rate of Rebate: Amount of allowable investment is either up to 25% of total income or Tk. 5,00,000/- 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 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

Donation to socioeconomic or cultural development institution established in Bangladesh by Aga Khan Development Network

Who should submit Income Tax Return ?

If total income of any individual other than female taxpayers, senior taxpayers of 70 years and above and retarded taxpayers during the income year exceeds Tk 1,65,000/-. If total income of any female taxpayer, senior taxpayer of 70 years and above and retarded taxpayer during the income year exceeds Tk 1,80,000/-. If any person was assessed for tax during any of the 3 years immediately preceding the income year. A person who lives in any city corporation/paurashava/divisional HQ/district HQ and owns a building of more than one storey and having plinth area exceeding 1,600 sq. feet/owns motor car/owns membership of a club registered under VAT Law. If any person subscribes a telephone. If any person runs a business or profession having trade license. Any professional registered as doctor, lawyer, income tax practitioner, Chartered Accountant, Cost & Management Accountant, Engineer, Architect and Surveyor etc. Member of a Chamber of Commerce and Industries or a trade Association. Any person who participates in a tender. A person who has a Taxpayer's Identification Number (TIN). Candidate for Union Parishad, Paurashava, City Corporation or Parliament.

Time to Submit Income Tax Return: For Company By fifteenth day of July next following the income year or, where the fifteenth day of July falls before the expiry of six months from the end of the income year, before the expiry of such six months. For Other than Company Unless the date is extended, by the Thirtieth day of September next following the income year. Consequences of Non-Submission of Return

imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. 1,000/In case of a continuing default a further penalty of Tk. 50/- for every day of delay.

Assessment Procedures :

For a return submitted under normal scheme, assessment is made after hearing. For returns submitted under Universal Self Assessment Scheme, the acknowledgement slip is determined to be an assessment order. Universal Self Assessment is of course subject to audit.

Appeal against the order of DCT : A taxpayer can file an appeal against DCT's order to the Commissioner (Appeals)/Additional or Joint Commissioner of Taxes (Appeals) and to the Taxes Appellate Tribunal against an Appeal order. 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.

Major areas for final settlement of tax liability : Tax deducted at source for the following cases is treated as final discharge of tax liabilities. No additional tax is charged or refund is allowed in the following cases:

Supply or contract work Band rolls of hand made cigarettes Import of goods Transfer of properties Export of manpower Real Estate Business Export value of garments Local shipping business Royalty, technical know-how fee Insurance agent commission. Auction purchase Payment on account of survey by surveyor of a general insurance company Clearing & forwarding agency commission. Transaction by a member of a Stock Exchange. Courier business Export cash subsidy

Tax Recovery System : In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:

Imposition of penalty Attachment of bank accounts, salary or any other payment.

Filing of Certificate case to the Special Magistrate.

Advance Payment of Tax : Every taxpayer is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds Taka three lakh. Penalty is imposed for default in payment of any installment of advance tax. Fiscal incentives : Following are fiscal incentives available to a taxpayer:a) Tax holiday : Tax holiday is allowed for industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions. Industrial Undertaking Eligible for Tax holiday : (i) An industry engaged in production of textile, textile machinery, jute goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers, compressors, basic raw materials of drugs, chemicals and pharmaceuticals. (ii) An industry engaged in agro-processing, ship building, diamond cutting. Physical Infrastructure Eligible for Tax holiday: Sea or river port, container terminals, internal container depot, container freight station, LNG terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, mono rail, underground rail, telecommunication other than mobile phone, large water treatment plant & supply through pipe line, waste treatment plant, solar energy plant, export processing zone. Tourism Industry Eligible for Tax holiday : Residential hotel having facility of three star or more. b) Accelerated depreciation: Accelerated depreciation on cost of machinery is admissible for new industrial undertaking in the first year of commercial production 50%, in the second year 30% and in the third year 20%. c) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods and having an annual turnover of not more than taka twenty four lakh is exempt from tax. d) Industry set up in EPZ is exempt from tax for a period of 10 years from the date of commencement of commercial production. e) Income from fishery, poultry, cattle breeding, dairy farming, horticulture, floriculture, mushroom cultivation and sericulture are exempt from tax up to 30th June, 2011, subject to investing at least 10% of the exempted income that exceeds one lakh Taka, in government bonds. f) Income derived from export of handicrafts is exempted from tax up to 30th June, 2011. g) An amount equal to 50% of the income derived from export business is exempted from tax. h) Listed companies are entitled to 10% tax rebate if they declare dividend of 20%

or more. i) Income from Information Technology Enabled Services (ITES) business is exempted up to 30th June, 2011. Major areas for final settlement of tax liability : Tax deducted at source for the following cases is treated as final discharge of tax liabilities. No additional tax is charged or refund is allowed in the following cases:

Supply or contract work Band rolls of hand made cigarettes Import of goods Transfer of properties Export of manpower Real Estate Business Export value of garments Local shipping business Royalty, technical know-how fee Insurance agent commission. Auction purchase Payment on account of survey by surveyor of a general insurance company Clearing & forwarding agency commission. Transaction by a member of a Stock Exchange. Courier business Export cash subsidy

Tax Recovery System : In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:

Imposition of penalty Attachment of bank accounts, salary or any other payment. Filing of Certificate case to the Special Magistrate.

Advance Payment of Tax : Every taxpayer is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds Taka three lakh. Penalty is imposed for default in payment of any installment of advance tax. Fiscal incentives : Following are fiscal incentives available to a taxpayer:a) Tax holiday : Tax holiday is allowed for industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions. Industrial Undertaking Eligible for Tax holiday :

(i) An industry engaged in production of textile, textile machinery, jute goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers, compressors, basic raw materials of drugs, chemicals and pharmaceuticals. (ii) An industry engaged in agro-processing, ship building, diamond cutting. Physical Infrastructure Eligible for Tax holiday: Sea or river port, container terminals, internal container depot, container freight station, LNG terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, mono rail, underground rail, telecommunication other than mobile phone, large water treatment plant & supply through pipe line, waste treatment plant, solar energy plant, export processing zone. Tourism Industry Eligible for Tax holiday : Residential hotel having facility of three star or more. b) Accelerated depreciation: Accelerated depreciation on cost of machinery is admissible for new industrial undertaking in the first year of commercial production 50%, in the second year 30% and in the third year 20%. c) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods and having an annual turnover of not more than taka twenty four lakh is exempt from tax. d) Industry set up in EPZ is exempt from tax for a period of 10 years from the date of commencement of commercial production. e) Income from fishery, poultry, cattle breeding, dairy farming, horticulture, floriculture, mushroom cultivation and sericulture are exempt from tax up to 30th June, 2011, subject to investing at least 10% of the exempted income that exceeds one lakh Taka, in government bonds. f) Income derived from export of handicrafts is exempted from tax up to 30th June, 2011. g) An amount equal to 50% of the income derived from export business is exempted from tax. h) Listed companies are entitled to 10% tax rebate if they declare dividend of 20% or more. i) Income from Information Technology Enabled Services (ITES) business is exempted up to 30th June, 2011.

Value Added Tax

(i) VAT is imposed on goods and services at import stage, manufacturing, wholesale and retails levels; (ii) A uniform VAT rate of 15 percent is applicable for both goods and services;

(iii) 15 percent VAT is applicable for all business or industrial units with an annual turnover of Taka 2 million and above; (iv) Turnover tax at the rate of 4 percent is leviable where annual turnover is less than Taka 2 million; (v) VAT is applicable to all domestic products and services with some exemptions; (vi) VAT is payable at the time of supply of goods and services; (vii) Tax paid on inputs is creditable/adjustable against output tax; (viii) Export is exempt; (ix) Cottage industries (defined as a unit with an annual turnover of less than Taka 2 million and with a capital machinery valued up to Taka 3,00,000) are exempt from VAT; (x) Tax returns are to be submitted on monthly or quarterly or half yearly basis as notified by the Government. (xi) Supplementary Duty (SD) is imposed at local and import stage under the VAT Act, 1991. Existing statutory SD rates are as follows: (a) On goods: 20%, 35%, 65%, 100%, 250% & 350% (b) On services: 10%, 15% & 35%. Tax Base for VAT: Import Stage: Customs Assessable Value + Customs duty + Supplementary Duty

Domestic/Local Stage: a) Goods (manufacturing): [Production cost + Profit and Commission (if any) + Supplementary duty (if any)] b) Services: [total receipts excluding VAT but including supplementary duty (if any)] Truncated Base / Fixed Value Addition: In some of the cases of goods and services producers and sellers face difficulties in availing VAT credit/adjustment facilities due to non availability of invoices from the sellers of input. In order to remove this operational difficulty fixed bases such as 10%, 25%, 30%, and 60% value addition is taken into account for calculation of VATfor a number of goods and services. In such circumstances net VAT ratefor different rates of value addition comes to 1.5%, 2.25%, 4.5% and 9%.

VAT at the wholesale and retail stage: In case of wholesalers and retailers, there is a special provision for a 1.5% percent VAT known as Trade VAT on the total sale, provided that the wholesaler/retailer do not avail the facility of input credit/adjustment. Such tax is also collected at the import stage from importers of finished goods as an advance trade VAT. Tariff Value for imposition of VAT: Under the VAT Law, the government is empowered to fix Tariff Value for some items for the collection of VAT. Example: tariff value for mild-steel products produced from imported/locally procured re-rollable scraps is TK 4000.00 per MT. Normal VAT input credit is also not available under this system. Deduction of VAT at source: As deduction at source is also practiced in case of VAT on certain services, Government, Semi-Government, Autonomous Bodies, NGOs, Banks, Insurance Companies and Limited Companies are authorized by the government to deduct applicable VAT on the services at source. Excise Duty: At present excise dutyapplies to only two items: bank depositsand domestic air ticket (Tk. 250 per journey).

NBR going for online tax payment system, Bangladesh

The National Board of Revenue (NBR) is heading towards the online tax payment system for bringing efficiency and transparency in tax administration. The first step for the introduction of on line payment of tax- automation work was launched yesterday at the tax offices. NBR Chairman Muhammad Abdul Mazid formally launched the programme at tax zone1 by handing over a computer to the income tax officials. We'll be able to launch on line tax payment system gradually with the full automation in income tax offices, he said. Once automation is completed, communication gap between taxpayers and tax men will be minimized, he said. Full computerization will save time of the tax men and make a hassle-free tax payment system. Convener of the automation steering committee Kanon Kumar Roy expressed his gratitude to the government for allocation of fund for automation in tax administration. He said: It is the formal starting of automation work, but major portion of the work,

which needs proper planning, still remains to be done. The NBR chairman said the government has provided funds to the board for the automation programme instead of including it in the Annual Development Programme (ADP). This will expedite the project work, he added.