¥ Company Tax Assessment &, Presented by Ranjan Kumar Bhowmik sau Former Member National Board of Revenue |. Presentation outline acca DSR ad Se as) Introduction Definition and classification of companies Obligations of every company as a corporate taxpayer Mandatory submission of tax return within the tax day Tax audit and assessment under USA Maintenance of accounts as per BAS Inadmissible expenditure Company tax rates Some special reduced tax rates Tax holiday and some other tax incentives * CSR 23/08/2022¥ » 23/08/2022 z * Introduction of corporate TAX 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. e@ 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 @ company as defined in the Companies Act, @ 1913/1904 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 industial or business enterprise; (@) Any association or combination of persons called by whatever name, if any of such persons is @ company as defied in the Companies Act 1913/1864; (4) Any foreign association or body, incorporated outside Bangladesh, and (8) Any foreign association or body not incorporated by or under any law, which the Board may, by general or special order, declare tobe a company. > [ Ret section 2(20))v Classification of Compa: For preferential tax purpose, companies are classified into following groups: (1) Bank, insurance and other financial institutions; (2) Merchant Bank (3) Publicly traded company (4) Non-publicly traded company (5) Mobile Phone Operator company (6) Tobacco manufacturing company (7) One Person Company (OPC) | Publicly Traded Company: “Publicly traded Company” or listed company means a company which fulfills the following | conditions: + The Company is registered in Bangladesh || under the Companies Act 1913 or 1994; + The company is enlisted with the Stock Exchange before the end of the concerned income year. 23/08/2022» 23/08/2022 * Obligations of a Corporate Taxpayer Following are the corporate tax compliance obligations as per various sections of the Income Tax Ordinance, 1984: (1) Obligations as a corporate taxpayer. e (2) Compliance with various notices. (3) Obligations to deduct/collect tax at source and deposit it in the Govt. ‘exchequer and timely reporting obligation. * Obligation as a corporate taxpayer e TIN registration [section 184A, 1848] Displaying of TIN Certificate [section 184C] ‘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 filed return discovered before the assessment [section 78] Maintenance of accounts as per BAS [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)] Compliance with notice to re-open [section 93(1)] + Notice to attend hearing u/s 130 in case of imposing penalty [section 123-128] + Notice for calling information (section 113] 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 statement in case of payment of salary [section 108], interest {section 109}, dividend [section 110] and return ‘submission information of employees [section 108A 23/08/2022Monthly TDS statement “A monthly statement of TDS from salary to be submitted in the form prescribed at Rule-21 to the concerned DCT within 20% day of the month following the end of the month of deduction [Section 58(3) read with Rule-21] + Another monthly statement of TDS from other than salary also to be submitted in the form prescribed at Rule-18(7) to the concerned DCT within 20" day of the month following the end of the month of deduction [Section 58(3) read with Rule-18(7)] * Penalty may be imposed for violation of this law which is Tk.500 plus Tk. 1,000 per month during which the default continues. [Section 124(2)(a)] List of minimum tax u/s 82C Sree el ela eeeamer 2 eye cn 28 1 Sones feces) sl 3 comma cin S24) 22 _artnoni commision (wc 58) 4 eatoeec cmon me Sn8K) 21 Foes haut ction SEE 5 Hanne det cin 5m) 22 Male ane en to, 6 Unde fe 826 orc cin cin 20) 7 Wonsning cestictin —Find) Spel Gmentneann tp sons 25 Sian oes ac y Snamonlaunweateame (Gra) 3) neal power sein 59 % Stectrepery clon) Fi 3 Ssryttoignneicnsnigin—27-_Cipaligntom sro hart by Sond een erst ‘roma mom eS 15. seni pores 29) ase ae 12 Importfother than rew-materalimportises 28 Signing money (ection 53°) Fieal) Sra © 12 Siping Agency commision js 1M Manpower export (se S38rule 170) 15 Export section 5368) 26 Shartolder of tock charge ne 17 Publ auction (ee. 3cerule 170) Income rom tery (econ $5) Foreign temttance (Secon 52} Motor Vhs Ping Commer (0590) nan Ships (Section Sa) sees 23/08/2022* Every company requires 12 digit TIN to mention it in the income tax return. TIN can be obtained through online. [section 184] + Now 12. digit, TIN certificate of sponsor shareholder — directors including reign shareholder is mandatory at the time of registration of a company under the Companies Act, 1994 peck 184A(1)] In the following cases, a company requires mandatory 12 digit TIN Certificate : (1) In case of opening import LC [clause (a)] (2) In case of getting IRC [clause (aa)] (3) In case of getting trade license [clause (b)] (4) In case of submitting tender for supply of goods, execution of contract or for rendering services [clause (c)] (5) Purchase of a land, building or apartment [clause (f]] (6) Fitness of car, jeep or microbus [clause (g)] (7) ISD connection to any kind of land telephone [clause (k)] 23/08/202223/08/2022 Every company shall submit return of income and display the proof of submission of return at a conspicuous place of the company’s business premises. y e [section 184c] Submission of Income Tax Return + Return must be filed within the Tax Day However, DCT may extend the return filing date upto 2 months and the date may further be extended up to another 2 months with the prior approval of the IJCT. + From the following example, we can see how to find out the assessment year and tax day.Signatory ‘The return should be signed by the principal officer. Principal officer may (@) 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, of 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 thereof. 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 self 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. + Itis 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. 23/08/202223/08/2022 + The procedure is very simple. Assessee has to prepare his return either by himself or with the help of other and then itis 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. Precondition 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. Tax as per return (if any) is to be paid before submission of return.23/08/2022 v « Tax audit & assessment + The return submitted under universal system may, afterwards, be selected by the NBR or its subordinate authority (if so authorized by the Board for audit. The Board will determine the manner such selection. assessment + If the return is selected for audit, then DCT will intimate it and if the response is not satisfactory then the DCT will proceed to make fresh assessment by issuing notice under section 83(1) for hearing and he will make assessment within 2 years from the end of the assessment year. Assessment can be done under section 83(2) or under section 84 as tho situation permits. » No tax audit, if at least 15% higher income is shown If return fled 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 fulfilment of the following 6 conditions: + Retum is to be accompanied by evidences in. support of tax exempted income if any. + Return 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. + Return does not show any refund + The company has complied with the provisions of section76A, 108 and 108A. 123/08/2022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. Ref: section 35 Allowable expenditure 23/08/2022Payment of salary, if tax has not been deducted uls 50 (sec. 30(a)] ‘Any payment where tax is deductable but not deducted (sec. 30(aa)). Payment of salary to an employee if the employee is required to obtain ‘e-TIN but falls to obtain the same [sec. 30(aa2)} ‘Salary willbe disallowed ifthe company failed to submit statement under section 108A, [sec. 30(aaaa)} Perquisites to any employee in excess of TK. 10,00,000 [sec. 30(6)} nts reation Expenditure on foreign travels of employees and thelr | spouse and minor children for holi and recreation exceeding 3 months basic salary or 8/4" of | actual expenditure whichever is less and such foreign travels shall not be oftener than once in every 2 years. Ref: Sec. 30(f) (ii) read with Rule 654 23/08/2022 1423/08/2022 Limit of free samples distribution Entertainment expenditure exceeding the following limits: Incoms Limit On the balance ai 32%) @ Head Office expenditure or intra-group expenditure exceeding 10% of the disclosed net profit applicable for foreign company [sec. 30(g)] % 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 Lp to 8% of the disclosed net profits allowed [sec. 30(h)] 30 1523/08/2022 + Salary paid otherwise than by bank transfer having gross monthly salary of 7k.20,000/- or more [sec.30() + Incentive bonus exceeding 10% of disclosed net profit sec. 304)] + Overseas traveling exceeding 0.50% of disclosed business turnover {sec.30(k] ‘© Any commission or discount paid by any company to its e shareholder director (sec. 30(] & Any cash payment above Tk.50,000 other than bank transfer ‘except any payment for goverment obligation. However, In case ‘of raw-material purchase the limit of cash payment is Tk.5,00,000 sec. 30(m)] * t jiture * Any payment by way of any rent of any property whether e used for residential or commercial purpose, otherwise than by bank transfer [sec. 30(n)] Any payment to any agentidistributor or for commission, fees or other 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)] + Promotional expenses exceeding 0.60% of disclosed business ‘turnover [see. 30(p)] + Depreciation allowance will be allowed as per Third ‘Schedule of T Ordinance, 1984. If charged beyond the allowable limit, the excess amount is to be disallowed. 16Corporate Tax Rate The income tax rates for companies are as follows: Types of Headssources of income ‘Tex Rates for Company ‘Assessment Year m2 (1) Capt Gain (2 schedule) 19% Tatars ofthe company | Previous txts | New txrate Noriaied Companies | aT] Association of persons (AOP] 30% bel cen Peon (Seecaly NGO, Meo ee) [f]AII salesireceipts must be through banking channel Otherwise [2] In case of investment and expenditure, per transection | previous tax rate exceeding Tk. 5,00,000 must be through banking channel will be tr atogther yearly transection exceeding 00000 | enicanie [Finance Act,2022] 23/08/2022 17altogether yearly transection through banking channel. Violation of serial number 2 and 3 wil lead to tax rate 22.5% {1110% or less than 10% paid-up capital through IPO [ZJAII salesireceipts must be through banking channel [3] In case of investment and expenditure, per transection ‘exceeding Tk. §,00,000 must be through banking channel and ‘altogether yearly transection exceeding Tk.26,00,000 must be through banking channel. Violation of serial number 2 and 3 will lead to tax rate 25% [Finance Act,2022) Assessment Year CRIES (2) Capital Gain trom sale of shares of listed companies chiens mee Be (other For publicly Traded Company exec a ee 23/08/2022 1823/08/2022 ‘Some special reduced tax rates ‘Sectors TAX RATES 580 Taverner ox Tae i ne I ated OE [Teste * i no 15 iad BTE IS a oatacng i i ne 25 dated 17 aTS . « = $80 no 205 cate 29/6/2036. sutonomous bode = SHO no AS cated 2/6/2018 i Pinata Uneiny= T = inane RG, BOE "Pour ache and Faberies | upto TRADI ‘al | BO v0 15 Ooed SOE next Te 1018 * next 1000,00 10% and on balance 19% ate ering orci, uP TH.10lneK, rat Te A ae=GHON | SHO no 19 Dated 30/6/2015 mushroom, ferzutare, and on balance @15% [peed fed production ete. (1) TaxHoliday The company is allowed tax holiday for 5 years or 10 years depending on the location of the industry (@)__haka, _ Mymensingh and —_Fistyear oom Chitagang vision (exciuding Second year ae Dhaks, Narayangonj, Gazipur and ‘Third year 80% | Chittagong steiet and alse the il 5 Fourth year ox | aisviet of Rangemat, ‘Bandarben ith year 20% | and hagrachar) Fiat year ard Second your 50% | (0) Rajshahi, Khulna, SythetBarsal Thea yeor come | and Rangpur excluding ely post sear mm | Corporation area (eluding the hit lar on Ea Sst of Rangamati, Bandarsan "i and Khagrachar iter — a ‘Seven year wm if i Eighth year 20% Section 4688 and 4600 Not year 2% Tent yor 10% 19100% 20% 70% 0% 10%, 0% 20% 2% Other Tax Exemptions Industries set up in EPZ will also enjoy tax exemption for 5/7 years depending on the location. [SRO no- 219- Ain/2012 dated 27/06/2012] Income from *Computer Software development business run by Bangladeshi resident is exempted from tax up to 30/06/2024[para-33 of 6 Schedule (Part-A)] . Income of the private power generation company up to 15 years from its commercial production. [SRO no- 36- Ain/97 dated 03/02/1997] Any income from the export of handicrafts for the period from Ist day of July, 2008 to the 30th day of June, 2024. (Para-35 of 6" Schedule (Part-A)) 23/08/2022 2023/08/2022 1. Software development 419Search engine optimization services 2 Software or application customization 20 Document conversion and imaging 3.NTTN Digital archiving 4, Digital content development & mgt. 21 Robotics process outsourcing 5, Digital animation development 22.Cyber secunty services 6. Website development 7. Website services Web listing 81 process outsourcing 10.Website hosting 11 Digital graphics design 12 Digital data entry and processing 13,Digital data analytics 14.Geographic Information Services(GIS) 4151T support & sofware maintenance services ‘These 6 tems newly inserted at 18 Software test lab services (6° Schedule(Par-A) Para-33 through | 17-Call centre services Finance Act2021 4, 18 Overseas mecical transcriptio » Corporate Social Responsibility 4 CSR is defined asthe integration of business operations and valves, Sinereby tie. interests “cl all Stakeholsers cuding investors, Susiomers, employees, the, Conmunty. and the environment are reflected in the Company's policies and actions. CSR is about how businesses aign ther values and behavior with the expectation of sakeholaers-ot jst customers and Ivestrs, but eso Employes, supplers, communities, reguators, specal' Interest sroups, and solely as'a whole iis the companys commitment be accountable stakeneldes, Ex Geman that busyneseas manage te. economic Snvionmental impacts of a operations ) ‘SRO no-223 datet.27/6/2012 ‘SRO no.186 dated 01/7/2014 2123/08/2022 ¥ 5 * Corporate Social Responsibility The companies will get 10% tax rebate on the lower amount of the following three: 20% of total income | | tex rebate = Whicheveris \Dtoy ig 1K.12900,00,000% { 'OWOrIS#OBE Poacable on 1200004 reaedas (#00 e ‘allowable CSR | Such allowable oe csr. ‘Actual money spent for CSR ‘The tax provision clearly specified 23 areas where the companies can perform their CSR for availing the benefit of tax rebate. Areas of CSR «natural caonites e citer oseen ot marae ners education of poor children specail > ercreruns opr wl dor il Oe { renebtaton of poor and oan ehiren som ot arto wale wl ¢ sanftatonin Chitagong hil vats 4 tetnert cf caters esc opi + teetment of eid vine + re medial weatert he poo by spaced howl i am ones, 22Areas of CSR (Cont...) technical and vocational education ‘© computer and information technology + vocational training to unskilled workers for man power export @ infrastructure of national level sports 4 Donation to national level institution set up in memory of the liberation war ‘ Donation to national level institution set up in memory of Father of the Nation ‘# Donations made to non-profit voluntary social welfare organizations {and treatment of HIV,AIDS and Drug addicted ‘® Donations made to non-profit voluntary social welfare organizations engaged for running rehabilitation center for recovered childrentwomen of cross boarder trafficking + Donation to any special calamities or tournament or any national rogram approved by the Govt. + regularity in payment of salary to staff + having waste treatment plant in industry # ragularity in payment of Income tax, VAT, Duty and loan CSR only through govt. approved institutions + Compliance of Labour Law. + amount spent for CSR will not be considered as business expenditures + documents in support of actual expenditure of CSR to be submitted to the concerned Submit CSR plan to NBR and obtain exemption certificate lengaged for running rehabilitation center, creation of awareness 23/08/2022 2323/08/2022 END OF THE PRESENTATION 28a Tat