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| Corporate practice bd |
What is Withholding Tax? Withholding tax rate in Bangladesh?
Withholding Tax is a government-imposed tax on income, interest, dividends, and other payments made by individuals or businesses. The payer deducts this tax at the source and remits it directly to the government on behalf of the recipient. In essence, withholding tax is a mechanism to ensure that tax liabilities are met as income is earned or payments are made.
Withholding Tax Rates in Bangladesh:
In Bangladesh, withholding tax rates vary depending on the nature of the payment and the status of the recipient (resident or non-resident). Here are some common rates:
Salaries:
For resident individuals, the tax rate is based on the income tax slabs applicable to the total taxable income.
For non-resident individuals, the withholding tax is 30% of the total income.
Interest on Savings Instruments:
10% if the recipient has a valid Taxpayer Identification Number (TIN).
15% if the recipient does not have a TIN.
Interest on Securities:
10% on interest or discount received by individuals or entities.
Dividends:
10% withholding tax on dividends for resident and non-resident individuals if they have a TIN.
15% if no TIN is available.
Payments to Contractors or Suppliers:
Rates range from 2% to 10%, depending on the nature of the contract and whether the payee has a TIN.
Royalties, Technical Fees, or Professional Services:
10% for residents.
20% for non-residents.
Rent on Property:
5% withholding tax for rent of immovable property.
Export Earnings:
0.5% of the export value.
Special Considerations:
Rates may differ based on specific agreements or treaties, such as Double Taxation Avoidance Agreements (DTAA).
Certain payments might have exemptions or reduced rates depending on specific industry regulations or government incentives.
These rates are subject to change as per the National Board of Revenue (NBR) guidelines and the annual Finance Act. It is advisable to consult the latest tax regulations or a tax professional for the most current rates and compliance requirements.