Legal Framework and Statutory Basis
Taxation of Foreign Companies
Foreign companies operating in Bangladesh are categorized as either 'Resident' or 'Non-Resident' based on the control and management of their affairs. Under Section 2(64) of the Income Tax Act 2023, a company is resident if it is registered in Bangladesh or its control and management are situated wholly in Bangladesh during the relevant income year.
| Entity Type | Applicable Tax Rate (FY 2023-24) | Statutory Reference |
|---|---|---|
| Non-listed Company | 27.5% (Subject to conditions) | Finance Act 2023 |
| Publicly Traded Company | 20% - 22.5% | Finance Act 2023 |
| Foreign Company (Branch/Liaison) | 30% | Income Tax Act 2023 |
| Non-Resident Individual | 30% (Flat Rate) | Section 37, ITA 2023 |
The Compliance Roadmap
Double Taxation Avoidance Agreements (DTAA)
Bangladesh has signed DTAAs with over 40 countries to prevent double taxation. Under Section 71 of the Income Tax Act 2023, where the Government has entered into an agreement with a foreign country, the provisions of the DTAA shall prevail over the domestic law to the extent they are more beneficial to the taxpayer. This typically reduces Withholding Tax (WHT) on dividends, royalties, and technical fees.
Filing Requirements for Expats
- Residency Test: Under Section 2(70), an individual is resident if they stay in Bangladesh for 182 days or more in an income year.
- Tax Day: The deadline for filing returns for individuals is 'Tax Day', usually November 30th, as per Section 2(81).
- Withholding Tax: Employers of foreign nationals must deduct tax at source under Section 86 and provide a certificate of deduction.
Consult LegalBD
For cross-border tax structuring and NBR representation, contact our commercial wing.
Schedule ScopingFrequently Asked Questions
What is the tax rate for a non-resident individual not being a Bangladeshi expatriate?
Pursuant to the First Schedule of the Income Tax Act 2023 and the Finance Act, non-resident individuals (excluding non-resident Bangladeshis) are taxed at a flat rate of 30% on their total taxable income earned in Bangladesh.
How are dividends paid to a foreign parent company taxed?
Under Section 117 of the Income Tax Act 2023, tax is withheld at source on dividends. While the domestic rate is typically 20% for companies, this may be reduced to 10% or 15% if the parent company is a resident of a country with which Bangladesh has a Double Taxation Avoidance Agreement (DTAA) under Section 71.
◆ Related Statutory Guides & Practice Insights
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/establishing-company-bangladesh-investors-guide/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• Establishing a Company in Bangladesh: A Comprehensive Investor's Guide</a>
</li>
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/rjsc-name-clearance-share-transfer-form-iii-compliance/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• RJSC Name Clearance, Share Transfer & Form III Compliance Guide</a>
</li>
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/100-percent-foreign-equity-company-registration-bangladesh/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• 100% Foreign Equity Company Registration in Bangladesh: The Definitive Legal Guide</a>
</li>
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/foreign-investment-bangladesh-guide/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• Complete Guide to Foreign Investment in Bangladesh 2025</a>
</li>