1/29/2020 ¥ = Company Tax Assessment Ssente ‘& hg, by Ranjan Kumar Bhowmik «ou Z Member(Tax) Introduction In the‘Income Tax Ordinance, 1984, there is no separate status for taxation of a corporate body, But in the context of Bangladesh, corporate taxation means charging of tax on profit of companies. So corporate tax can be termed as company tax which differs from tax levied on individual. Both companies and individuals are assessed and taxed under the same I.T. Ordinance,1984.Definition of Company: “Company” means a company as defined in the Companies Act, 1913/1994 and includes the following:- (1) A body corporate established or constituted by or under any law for the time being in force; (2) Any nationalized banking or other financial institution, insurance body, any industrial or business enterprise; (3) Any association or combination of persons called by whatever | ‘name, if any of such persons is a company as defied in the Companies Act 1913/1994; (4) Any foreign association or body, incorporated outside Bangladesh, and (6) Any foreign association or body not incorporated by or under any law, which the Board may, by general or special order, = declare to be a company. Ref section 2(20) Classification of Companies For preferential tax purpose, Companies are classified into following groups: (1) Bank, insurance and other financial institution; (2) Merchant Bank (3) Publicly traded company = | (4) Non-publicly traded company ___ (8) Mobile Phone Operator company = (6) Tobacco manufacturing company 1129/2020Publicly Traded Company: | “Publicly traded Company” or listed company means a | company which fulfils the following conditions: e (a)The Company is registered in Bangladesh under the Companies Act 1913 or 1994; (b)The company is enlisted with the Stock Exchange before the end of the concerned income year. ¥ & Obligations of a Corporate Taxpayer Following are the corporate tax compliance obligations as per various sections of the Income Tax Ordinance, 1984: (4) Obligations as a corporate taxpayer. (2) Compliance with various notices. (3) Obligations to deduct/collect tax at source and deposit it in the Govt. exchequer and timely reporting obligation. 1129/2020oeeesee oe Obligation as a corporate taxpayer TIN registration [section 1848, 1848] Displaying of TIN Certificate [section 184¢] Advance income tax payment [section 64-73] Preparation of tax return [section 75] Payment of tax as per tax return (section 74] Filing of tax return within the Tax Day [section 75) Filing of revised return if any omission or incorrect statement in the previously fled retum discovered before the assessment [section 78] Maintenance of accounts as per IAS [section 35] Production of accounts and documents on receipt of a notice from the DCT [section 79] Compliance with various notices Demand Notice [section 135) ‘Notice to file return [section 77] ‘ Notice to produce accounts (section 79] ‘# Hearing notice [section 83(1)] 4 Compliance with notice to re-open [section 93(4)} + Notice to attend hearing u/s 130 in case of imposing a penalty (section 123-128] + Notice for calling information (section 113] = 1/29/20201/29/2020 Obligations to deduct/collect tax at source Deduction of tax at source (TDS), wherever applicable and deposit tax to the Govt. Treasury [section 48-63] Giving proof of TDS with necessary information [section 58] Furnishing annual retum in case of payment of salary [section 108}, interest [section 109}, dividend [section 110] and return submission | information of employees [section 108A} Man TIN + Every company requires 12 digit TIN to mention it in the income tax return. TIN can be obtained through online. y [section 1848] Now 12 digit TIN certificate of sponsor shareholder directors including foreign shareholder is mandatory at the time of registration of @ company under the Companies Act, 1994 - = [Section 1844(1)}Subn In the following cases, a company requires mandatory 12 digit TIN Certificate : (1) Incase of opening impart LE [clause (a)] (2) In case of getting IRE [clause (aa)) (3) In case of getting trade license [clause (b)) (4) In case of submitting tender for supply of goods, execution af contract ar for rendering services [clause (c)] (6) Purchase ofa land, building ar apartment (clause (f)] (6) Fitness of car, jeep or microbus [clause (q)) = (7) ISD connection to any kind of land telephone (clause (k)) Every company shall obtain 12 digit TIN Certificate through online and display such certificate at a conspicuous place of the company's business premises. [section 184c] 1/29/2020Submission of Income Tax Return + Return must be filed within the Tax Day + However, DCT may extend the return filing date up the 2 months and the date may further be extended up to another 2 months with the prior approval of the CT. Signatory The return should be signed by the principal officer. Principal officer may be- (@) Managing director, manager, secretary, treasure, CEO.CFO or ‘accountant (by whatever designation known), or any officer responsible for management of the affairs, or of the accounts, cof the company; and (b) Any person connected with the management or the ‘administration of the company upon whom the DCT has ‘served a notice of his intention to treat him as principal officer thereot. 1129/2020Universal self-assessment * Universal self assessment system has been introduced in our country from the assessment year 2007-2008. Every assessee (including company) is eligible to submit return under this system. in this system assessee has to tick the box universal seif assessment at the top of the return form. DCT will issue a receipt of such return and that receipt will mean that assessment is complete. + Its hassle free in the sense that assessment has been done on the basis of return and without any physical presence. Meanwhile, due to this simplicity, it becomes very popular method of submitting return. Pr e to subi return under USA + The procedure is very simple. Assessee has to prepare his return either by himself or with the help of other and then it is to be signed and verified. + Assessee has to tick the box universal self assessment at the top of the return form and after paying tax (if applicable) submit the return within the Tax Day. 1/29/2020Procedure to submit return under USA The assessee should keep in mind the following: + Such return must be submitted within the last date of submission of return or within the extended time allowed by the DCT. ¢ Taxas per return (if any) is to be paid before ‘submission of return. Tax audit & assessment: + The return submitted under universal self assessment system may, aiterwards, be selected by the NBR or its subordinate authority (i so authorized by the Board) far audit. The Board will determine the manner of such selection, + Ifthe return is selected for audit, then DCT wil intimate it and ifthe response isnot satisfactory then the OCT will praceed to make fresh assessment by issuing notice under section 83() far hearing and he make assessment within 2 years from the end ofthe assessment Year. Assessment can be dane under section 83(2) ar under section 84 as the situation permits, 1129/2020s No tax audit, if at least 15% higher income is shown If return filed under USA scheme showing at least 15% higher income than the income assessed or shown in the return of the immediate preceding assessment year shall not be selected for audit on fulfillment of the following 6 conditions: + Retum is to be accompanied by evidences in support of tax. ‘exempted income if any. # Retum is to be accompanied by bank statement in support of taking any loan + Return does not show receipt of gift + Return does not show any income on which reduced tax rate is applicable. + Retum does not show any refund + The company has complied with the provisions of section75A, 108 and 108A, * Re-open universal self assessment u/s:93 if any concealment has been detected in the return submitted by the company under USA scheme then the DCT may re-open the case withir end of the | assessment year and proceed to assess 1/29/2020 10+ Audited Statement of accounts. + Income Computation sheet if taxable income differ from net profit shown at audited statement of | accounts. y = | __Refssection-75 Maintenance of Accounts Every company shall, furnish a copy of the trading _ | account, profit and loss account and the balance sheet in respect of the income year certified by a chartered accountant to the effect that accounts are maintained according to IAS and reported in accordance with IFRS and to be audited as per ISA. Y Ref: section 35 1/29/2020 "Payment of salary, if tax has not been deducted u/s 80 (sec. 30(a)] ‘Any payment where tax is deductable but not deducted [see.30(aa)]. Payment of salary to an employee if the employee is required to obtain {@-TIN but fails to obtain the same (sec. 30(aaa)] Salary will be disallowed if the company failed to submit statement under section 108A. (sec. 30(aa2a)} Perquisites to any employee in excess of TK. 550,000 [sec. 30(e] 1/29/2020 12Inadmissible Expenditure Foreign_travels_of employees and their dependent holidaying ang recreation Expenditure on foreign travels of employees and their spouse ‘and minor children for holidaying and recreation exceeding 3 months basic salary or 3/4" of actual expenditure whichever is less and such foreign travels shall not be oftener than ‘once in every 2 years. + Ref: Sec. 30{f (i) read with Rule 658 Limit of free samples distribution Tumover seoftumover Pharmaceutical Food, Cosmetics Other Industry and Toiletries Industry industry Up to Tk. 5 crore 2% 1% 0.50% Seeding Tk 5 1% 0.80% 0.25% crore, but up to Tk 10-crore = & Exceeding Tk. 100.5% 0.25% 0.10% 2 5 o Section 30(f(iv) read with Rule 65C 1/29/2020 13. Entertainment expenditure exceeding the following limits: Income _ Limit “On Ast Tk. 10:lac A% ‘On the balance 2% ‘ Head Office expenditure or intra-group expenditure exceeding 10% of the disclosed net profit applicable for foreign company [sec. 30(Q)} ‘ Royalty and technical know-how fee exceeding10% of the disclosed net profit for 1st 3 income years from the | commencement of business or profession. After 3 years Up to 8% of the disclosed net profit is allowed [sec. 30(h)] Salary paid otherwise than by crossed cheque or bank transfer having gross monthly salary of Tk.15,000/- or more [sec.3¢ Incentive bonus exceeding 10% of disclosed net profit [sec. 30()] Overseas traveling exceeding 1.25% of disclosed tumoverfsec.30(k}] ‘Any commission or discount paid by any company to its shareholder — directorfsec. 30(0)] = 1/29/2020 14inadmissible Expenditure ‘Any cash payment above Tk.50,000 other than cheque or bank transfer except the following: + Payment for purchase of raw materials ‘© Any payment for government obligation. (sec. 30(m)} ‘Any payment by way of any rent of any property whether used for residential or commercial purpose, otherwise than by crossed cheque or bank transfer (sec. 30(n)] Any payment to any agent/ distributor or for commission, fees or ther sum in relation to money transfer through mobile banking (or mobile phone recharge or against consultancy, catering, event ‘management, manpower supply, security service if the payee does not have any e-TIN [sec. 30(0)] Tax Depreciation Allowance of depreciation as per Third Schedule of 1.1 Ordinance, 1984, if charged beyond the allowable limit, the excess amount is to be disallowed. a 1/29/2020 15Corporate Tax Rate The income tax rates for companies are as follows: (2) Capea Gain( 2 seneaul) (2)capal introns © (3) Dido income of nares otis ‘(Capita gain (2>#schedute) a 2) Capital Gain from sale of shares of listed ‘companies {@)DWvidena income (@)Otner For pubicly traded company Income Nowi listed companies in case of declaring more than 20% shares = through IPO Fornon-pubiy traded company = including nonesident company) * TaxRatostorthe 1129/2020 161/29/2020 (2) Capital Gain from sale of shares of listed companies Hoole (3) widens come Phone. (4) Other Income For publicly Traded cet i one than poliy ‘aded Convoy Reduced Corporate Tax Rates » RMG export: 12% /10% [SRO no 255 dated 01/8/2017) » Textile 15% [SRO no 193 dated 30/6/2015} » Jute Export: 10% [SRO no 205 dated 29/6/2016) » Jute Industries 10% [SRO no 258 dated 10/8/2016] » Selected autonomous bodies: 25% [SRO no 158 dated 26/6/2014) » National level research institute: 15% (sR0 ne 63 dates 26/6/2014] » Private University: 15% [SRO no 158 dated 28/6/2007] » Poultry [up to Tk.20 lacenil, next Tk. 10 lac=@5% and on rest @10%][SRO 254 Dated 16/8/2015] ___® Fisheries [up to Tk.40 lac=nil, next Tk. 10 lac=@5% and on . rest @10%) [SRO 255 Dated 16/8/2015) 7Fiscal Incentives: (2) Tax Holiday u/s 4688 and 46cc This is a period (S years or 10 years) for which the company is allowed tax exemption (a) Onaka, Mymonsingh end Crktagang First yeor 20% divsion (excluding Onaka, Narayangon), Second year 20%, Gazipur and Chitagong district and also Thre year oo the hil itct of Rangamat,Bandarban 5 Fourthyear 40% and Khagrachar) Fit year 20% Fest yeorandSaconayear 90% (©) Rehan Knvlne, Shetrisal andr oar 20% Rangpur exuding city corpration are Foun sear Toa incuding the hil trek of Rangamat, Sandee and Koga ote tox » : Sere er = & foyer son wn mn veo ar ion Other Tax Exemptions |. Industries set up in EPZ will also enjoy tax exemption for 5/7 years. ll, Income from ‘Computer Software development business run by Bangladeshi resident is exempted from tax up to 30/06/2024[para-33] lil Income of the private power generation company up to 15 years from its commercial production. [S.R.0 no- 36-Ain/97 dated 03/02/1997] IV. Any income from the export of handicrafts for the | Period from Ast day of July, 2008 to the 30th dayof =| | June, 2024. (Para-35) 1/29/2020ICT related tax exempted sectors be 1. Software development 15.1T support & software 2. Software or application customization maintenance services 3. NTTN 16 Software test lab services 4, Digital content development & mgt. 47.Call centre services 5, Digital animation development 18. Overseas medical 6.Website development transcription 7.ebsite services 19.Search engine | 8.Web listing optimization services || 9.lT process outsourcing 20.Document conversion and 10.Website hosting imaging Digital archiving 14.Digital graphics design ‘24.Robotics process 12,Digital data entry and processing outsourcing | 13,Digtal data analytics 22.Cyber security services | 14,Geographic Information | Services(@is) General Export Incentives ++ 50% income of a company derived from the business of export is exempted from tax. + This is not applicable for a company registered outside Bangladesh, enjoying exemption of tax or reduction in rate by any notification made under this Ordinance. Y Ref: 6" Schedule(Part-A) Para-28 1/29/2020 19Corporate Social Responsibility © CSR is defined as the integration of business operations and values, whereby the interests of all stakeholders including investors, customers, employees, the community and the environment are reflected in the company's policies and actions, 2 CSR is about how businesses align their values and behavior with the expectation of stakeholders-not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups, and society as a whole. @ It is the company’s commitment to be accountable to its stakeholders. CSR demands that businesses manage the economic, Social, and environmental impacts of their operations, 5 ‘SRO n0-223/Law/Tax/2012 dt.27/6/2012 * Corporate Social nsibilit The companies will get 10% tax rebate on the lower amount of the following three: 20% of total income 2 Whicheveris | tax rebate @10% 1m 120000000/- f ¥Eis tote ppteaie on i allowablecsr | Such allowable = CSR. ‘Actual money spent for SR. = The tax provision clearly specified 23 areas where the companies can perform their CSR for availing the benefit of tax rebate. 1/29/2020 20eee eee eeeses eeeee * Areas of CSR natural calamities old home welfare of retarded persons education of poor children ‘accommodation of slum dwellers awareness program of anti- Submit CSR plan to NBR and obtain exemption certificate END OF THE PRESENTATION 1/29/2020 22