Bangladesh doubles source tax on creative media services despite creative economy push

The tax hike comes amid a push for a creative economy and youth-led entrepreneurship

The government has proposed doubling the withholding tax on “creative media” services, even as it speaks of promoting a creative economy and supporting young entrepreneurs.

The proposal comes as the new BNP government, after 19 years of returning to budget formulation, outlines measures it says are aimed at developing a creative economy while also expanding the tax base.

For the FY2026-27 budget proposed by Finance Minister Amir Khosru Mahmud Chowdhury, the National Board of Revenue (NBR) has set a revenue collection target of about Tk 6.05 trillion and said expanding the tax base will be key to achieving it.

As part of this effort, the NBR has increased withholding tax rates on creative media services.

A new rule has been issued under the Withholding Tax Rules 2026, which will come into effect from Jul 1.

The rules state that payments for creative media services will now attract 4 percent withholding tax at the time of billing.

This means individual taxpayers providing creative media services will have 4 percent deducted at source from their earnings, with the remaining amount paid to them.

Currently, the rate is 2 percent of the total bill or 10 percent of commission or fees, whichever is higher in monetary terms.

Since commission earnings in such services are typically lower, tax is usually applied on the total bill. The change effectively doubles the tax burden.

The increase is expected to affect young professionals working in creative media, with concerns that it may discourage participation in the sector.

The same increase from 2 percent to 4 percent will apply to several other service categories.

These include catering services, public relations services, event management, training and workshop services, courier services, packing and shifting, collection and recovery agencies, and printing and electronic media agency services, among others.

For printing and electronic media agency services, the current system allows a withholding tax of 0.65 percent of the total bill or 10 percent of commission.

Under the new rules, only a 4 percent withholding tax on the total bill will apply.

The government has, on one hand, spoken about expanding the creative economy, fostering young entrepreneurs and promoting sectors such as culinary arts within its broader creative economy framework.

On the other hand, the decision to increase withholding taxes on creative media and related services highlights a policy contrast, according to stakeholders.