Bangladesh hikes source tax on interest from securities for companies

Corporate taxpayers will have to pay a rate of 15 percent now, according to the latest changes to the Finance Act

The government has raised the rate of tax deducted at source on interest earned by corporate taxpayers through government securities or those approved by the Bangladesh Securities Exchange Commission (BSEC).

An ordinance making several changes to the Finance Act on Wednesday said that the rate of tax at the source of interest income from securities will be fixed at 15 percent for corporate taxpayers. The rate has been fixed at 10 percent for non-corporate taxpayers.

Previously, it was increased in all cases from 5 percent to 10 percent in the current fiscal year. Now the rate has been hiked again for corporate taxpayers.

The ordinance also states that advance tax collected from commercially operated motor vehicles will be considered as the final tax liability. This will be applicable only against income from commercially operated motor vehicles. This means it is not applicable for personal cars or vehicles employed for non-commercial uses.

However, the income earned from the taxpayer's motor vehicle will have to be calculated based on this advance tax.

If the taxpayer shows a greater level of income than calculated, the excess amount shown will be taxed regularly.

The Value Added Tax and Supplementary Duty Act, 2012 has also been amended through the ordinance.

It states that, from now on, the government will be able to exempt any product, product class or service from Value Added Tax (VAT), supplementary duty or advance tax through a gazette notification or special order.

This means the tax collection agency has now reversed course on the talk of reducing the power of the National Board of Revenue to grant tax exemptions and entrusting the matter the national parliament.