Corporate income tax is governed by the Income Tax Act 2023, which replaced the Income Tax Ordinance 1984, together with rules, notifications and the annual Finance Act that sets rates and amends the law. The National Board of Revenue administers the system through tax zones and specialised units, including a unit for large taxpayers. VAT, supplementary duty and customs duties are governed by separate statutes. Because the annual budget often changes rates, withholding percentages and procedures, we check the current Finance Act, NBR circulars and practice before advising on any specific corporate tax position.

A Bangladesh subsidiary of a foreign company is taxed as a resident company on its income under the Income Tax Act 2023, and dividends paid to the foreign parent are subject to withholding tax, possibly reduced by a treaty. A branch of a foreign company is generally taxed on profits attributable to its Bangladesh operations, and remittances to head office raise their own tax and foreign exchange questions. Liaison offices should not earn local revenue but still have withholding and filing obligations. We compare the corporate tax profile of each option when advising on market entry.

Payments to non-residents, including interest, royalties, service fees and dividends, are generally subject to withholding tax at rates set by the Income Tax Act 2023 and the Finance Act, unless a double tax treaty provides a lower rate and the conditions for relief are met. The Finance Act 2026 reduced the rate on interest paid to non-residents to 10% from 20%. The payer is responsible for deducting and depositing the tax, so errors fall on the Bangladesh company. We review contracts and treaty documentation before payments are made, and model the cost where the Bangladesh payer must bear the tax.

Companies that enter into international transactions with associated enterprises must price them on an arm's length basis and keep documentation supporting that pricing. The tax authorities can adjust income where they consider that pricing is not arm's length, and there are reporting requirements for qualifying transactions. Common risk areas include royalties, management fees, intra-group services, loans and purchase or sale of goods within a group. We advise on the legal framework and agreements, working with transfer pricing economists who prepare the benchmarking analysis, and documents are updated each year so that agreements and returns describe transactions consistently.

Read the notice carefully, diary every deadline and gather the records requested. Responses should be complete, accurate and consistent with the return and accounts, and explanations should be supported by documents rather than assertion. It is wise to involve advisers early, particularly where the audit raises questions of law, such as deductibility, the characterisation of a payment or treaty relief. We help companies prepare responses, attend hearings, and position the matter for appeal if the audit leads to an assessment the company considers wrong. Copies of everything submitted should be kept with a record of when it was sent.

The Income Tax Act 2023 provides a statutory appeal route, starting with an appeal to the appellate authority within the tax administration, then the Taxes Appellate Tribunal, and on questions of law the High Court Division. Strict time limits apply, and part payment of the disputed tax may be required. Alternative dispute resolution may also be available for some disputes, and where an authority acts without jurisdiction a writ petition may be appropriate. We advise on the strongest route. Time limits run from service of the order, so record the date of receipt and confirm the deadline at once.

Incentives have been offered for particular sectors, locations and activities, including tax holidays and exemptions for businesses in economic zones, export processing zones and hi-tech parks, and for certain priority industries. The availability, conditions and duration of incentives change through Finance Acts and government notifications, and recent policy has sought to reduce exemptions over time. Investors should therefore confirm the current position before relying on an incentive in their financial model. We review eligibility, the approvals needed and the conditions that must be maintained to keep the incentive. Incentives can be valuable, but conditional.

The buyer and seller usually prefer different structures. A share purchase keeps the target's tax history, including any hidden liabilities, while an asset purchase can give a fresh start but may involve VAT, stamp duty, registration costs and tax on gains for the seller. Payments to non-resident sellers can trigger withholding obligations for the buyer. We advise on these choices, on tax due diligence and on warranties and indemnities that protect the buyer against pre-closing corporate tax exposure, and we coordinate with accountants on modelling. Retaining part of the price until the tax position is confirmed is a common safeguard.