Bangladesh proposes halving withholding tax on reinsurance premium payments to non-residents

The move aims to lower operational costs for insurance firms transferring risks abroad

The government has proposed slashing the source tax on reinsurance premium fees paid to non-resident individuals or corporations by half for the next fiscal year.

Finance Minister Amir Khosru Mahmud Chowdhury announced the measure while presenting the proposed budget for the 2026-27 fiscal year in parliament on Thursday.

The new withholding tax rules published by the Income Tax Wing later showed that the rate on reinsurance premium payments will be reduced to 5 percent from the next fiscal year.

The rate is currently 10 percent, meaning the tax burden on such payments will be cut by half.

In his budget speech, the finance minister said the withholding tax deduction rate on insurance premiums paid to non-resident taxpayers had been reduced from 10 percent to 5 percent “to lower costs” associated with reinsurance in the insurance sector.

Many insurance companies transfer part of their risk exposure to foreign insurers through reinsurance arrangements.

In return, they pay premium fees to those overseas companies.

Under the Income Tax Act, a non-resident taxpayer refers to an individual or company that has not stayed in Bangladesh for the minimum required period during a tax year, generally 182 days or more.

Bangladesh currently has 82 insurance companies, including both public and private operators. Of them, 46 are general insurance companies.

Domestic reinsurance services are provided by only one institution, the state-owned Sadharan Bima Corporation.