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Corporate tax rate

The corporate tax landscape in Bangladesh as of 2025:

📊 Corporate Income Tax Rates

  • Publicly Traded Companies: Subject to a tax rate of either 22.5% or 25%, depending on specific conditions and exceptions.

  • Non-Publicly Traded Companies: Generally taxed at 27.5%, with certain exceptions applicable.

  • Standard Rate Adjustment: The standard corporate tax rate was reduced from 27.5% to 25%, effective from 1 July 2024.

📉 Minimum Tax Regime

Companies are required to compute their tax liability using three methods and pay the highest amount:

  1. Regular Tax on Profits: Based on net income.

  2. Withholding Tax (WHT): Applicable under certain sections.

  3. Tax on Gross Receipts: Applicable to companies with gross receipts over BDT 5 million and other persons with gross receipts over BDT 30 million.

🌐 Taxation Scope

  • Resident Companies: Taxed on their global income.

  • Non-Resident Companies: Taxed only on income that is received in Bangladesh or that accrues or arises in Bangladesh.

🗓️ Tax Filing Deadlines

Companies must file their income tax returns by the 15th day of the seventh month following the end of the income year. However, if this date falls before 15 September, the due date is extended to 15 September.

💡 Additional Notes

  • Tax on Non-Filers: A 20% tax is levied on the gross income of companies not obligated to file a return, with certain exemptions.

  • Historical Context: The corporate tax rate in Bangladesh has averaged 29.82% from 1997 to 2024, peaking at 40.00% in 1998 and reaching a low of 25.00% in 2016.

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Tax Holiday Benefits in Bangladesh

​In Bangladesh, the government offers tax holiday incentives to encourage investment in various industrial sectors, aiming to promote economic growth and regional development. These incentives vary based on the location of the industry and the specific sector involved.​

Duration and Scope of Tax Holidays:

  • General Industries: Industries established in developed regions, such as Dhaka and Chittagong (excluding certain hill tracts), are eligible for a tax holiday of 5 years. The tax exemption schedule typically starts with a 100% exemption in the first year, followed by 50% in the subsequent two years, and 25% in the fifth year. ​
  • Less Developed Regions: Industries set up in less developed areas receive a tax holiday of 7 years, with a structured exemption rate starting at 100% in the first three years, 50% in the next three years, and 25% in the seventh year. ​
  • Least Developed Regions and Export Processing Zones (EPZs): Industries located in the least developed areas and EPZs can enjoy tax holidays for 9 to 12 years, with full exemptions in the initial years, gradually decreasing over the tenure. ​

Recent Developments:

In an effort to enhance industrialization and export earnings, the Bangladesh Economic Zones Authority (BEZA) has approved the establishment of 29 private economic zones, with eight already operational. Investors in these zones are granted a 10-year tax holiday, which includes a full tax waiver in the first three years, followed by 80%, 70%, and 60% exemptions in the subsequent years. ​

Expansion of Eligible Sectors:

The government has extended tax holiday benefits to additional sectors to diversify industrial growth. Recent amendments include seven new sectors alongside the existing 26, aiming to attract investment in areas such as manmade fiber production and motorcycle manufacturing. These sectors are now eligible for tax holidays ranging from 5 to 10 years, depending on their location and compliance with specified criteria. ​

Special Considerations:

The government has also extended tax holiday facilities to private power generation companies. Companies that commence commercial production by June 30, 2024, are exempt from income tax for the first five years, with reduced rates in the subsequent years. Additionally, these companies benefit from exemptions on royalties, technical fees, and capital gains taxes. ​

Policy Discussions and Reforms:

There is an ongoing dialogue regarding the effectiveness and impact of tax holiday policies. Discussions focus on ensuring that these incentives align with national development goals, promote equitable regional growth, and attract investments in high-priority sectors. Recommendations include revisiting the policy to extend support to emerging sectors and conducting comprehensive analyses of the economic benefits of tax holidays. ​

These tax holiday initiatives are part of Bangladesh’s broader strategy to stimulate industrialization, create employment opportunities, and enhance export revenues, thereby contributing to the nation’s economic development.

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Bonded Warehouse

​In Bangladesh, bonded warehouses are facilities authorized by the National Board of Revenue (NBR) that allow export-oriented industries to import raw materials and packaging materials without immediate payment of customs duties and taxes. This system aims to enhance the competitiveness of Bangladeshi exports by reducing production costs and streamlining the import process.

Categories of Bonded Warehouses:

  1. Special Bonded Warehouses (SBW): These are designated for 100% export-oriented ready-made garment (RMG) industries, including woven garments, knitwear, and sweater manufacturing.
  2. General Bonded Warehouses (GBW): These apply to other 100% export-oriented industries, such as shipbuilding, accessories manufacturing (e.g., packing materials, labels, buttons), and certain home consumption industries (e.g., sugar, vegetable oil, leather, tobacco).

Benefits of Bonded Warehousing:

  • Duty-Free Imports: Industries can import necessary materials without paying customs duties upfront, improving cash flow and reducing production costs.
  • Deferred Duty Payment: Duties are paid only when goods are cleared from the warehouse for domestic sale, allowing businesses to manage working capital more effectively.
  • Storage Flexibility: Imported goods can be stored for extended periods (up to two years for export-oriented industries), providing flexibility in inventory management and production planning
  • Facilitated Export Processes: Bonded warehouses streamline the export process by allowing direct export of goods without the need for customs clearance at the port, saving time and reducing logistical complexities.

To utilize bonded warehousing facilities, businesses must obtain a bond license from the Customs Bond Commissioner ate. The application process includes submitting various documents, such as business registration, tax identification number, trade license, and financial statements, among others.

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It’s important to note that while bonded warehouses offer significant advantages for export-oriented industries, regulations and procedures are subject to change. Therefore, businesses should regularly consult official sources or seek professional advice to ensure compliance with current laws and regulations.

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Environmental Clearance

In Bangladesh, obtaining an Environmental Clearance Certificate (ECC) is mandatory for establishing and operating industrial units and projects, as stipulated by the Bangladesh Environment Conservation Act, 1995 (amended in 2010). The Department of Environment (DoE) oversees the issuance of these certificates to ensure that industrial activities comply with environmental standards. Categories of Industrial Units and Projects: Industrial units and projects are classified based on their potential environmental impact:
    1. Green Category: These projects have minimal or no adverse effects on the environment.
    1. Orange-A Category: Projects with moderate environmental impacts.
    1. Orange-B Category: Projects with significant environmental impacts.
    1. Red Category: Projects with the most substantial adverse environmental effectProcedure for Obtaining an Environmental Clearance Certificate:The process varies depending on the project’s category:
      1. Green Category:
        • Application: Submit an application using Form-3 to the DoE, including details such as the project’s name, location, and a description of raw materials and finished products.
        • Documents: Provide a location map, trade license, and a no-objection certificate from local authorities.
        • Fee: Pay the prescribed fee based on the project’s investment amount.
        • Issuance: The DoE issues the ECC within 15 days of receiving the application.
      2. Orange-A and Orange-B Categories:
        • Site Clearance: Obtain a Site Clearance Certificate from the DoE before starting construction.
        • Application: After site clearance, apply for the ECC using Form-3, including additional documents like a process flow diagram and layout plan showing the location of the Effluent Treatment Plant (ETP).
        • Documents: Submit an Initial Environmental Examination (IEE) report, effluent discharge arrangements, and a relocation and rehabilitation plan if applicable.
        • Fee: Pay the application fee as specified by the DoE.
        • Issuance: The DoE issues the ECC within 30 days of receiving the application.
      3. Red Category:
        • Location Clearance: Obtain a Location Clearance Certificate from the DoE before initiating any development.
        • EIA Approval: Conduct a detailed Environmental Impact Assessment (EIA) and obtain approval.
        • Application: Apply for the ECC using Form-3, providing comprehensive project details, EIA report, and ETP design.
        • Documents: Include a feasibility study report, process flow diagram, and emergency environmental hazard mitigation plans.
        • Fee: Pay the application fee as determined by the DoE.
        • Issuance: The DoE issues the ECC within 60 days of receiving the application.
      Validity and Renewal:
      • Green Category: ECC is valid for 3 years. Apply for renewal at least 30 days before expiration.
      • Orange-A, Orange-B, and Red Categories: ECC is valid for 1 year. Renewal applications should be submitted at least 30 days prior to expiry.
      For detailed procedures, required documents, and fee structures, refer to the official guidelines provided by the Department of Environment