Bangladesh: Finance Ordinance 2025: Tax Reforms to Drive Compliance and Equity

Overview:

Alongside the national budget, Bangladesh has introduced the Finance Ordinance 2025, an ambitious reform package reshaping personal income tax, corporate taxation, VAT, and compliance mechanisms. These changes reflect a focus on equity, digital enforcement, and rational revenue growth.

Personal Income Tax Reforms:

  • Tax-free threshold raised from Tk 350,000 to Tk 375,000.
  • Higher exemptions:
  • Women & Seniors (65+): up to Tk 425,000
  • Persons with Disabilities: up to Tk 500,000
  • Revised tax slabs increase effective rates for middle-income brackets.
  • Reimbursements for major surgeries and group insurance premiums are now non-taxable.
  • Minimum tax:
  • New taxpayers: Tk 1,000
  • Others (if income > exemption): Tk 5,000

Proposed Corporate Tax & Minimum Taxation:

  • Non-publicly traded companies: Tax rate raised from 25% to 27.5%
  • Non-publicly traded merchant banks: Now taxed at 40% from 37.5%
  • Publicly traded banks & companies: No change (incentivizing listing)

Minimum Tax (Gross Receipts-Based):

Exemptions & Final Settlements:

  • Income from prestigious awards (Nobel, Booker, Grammy): Tax-exempt
  • Universal Pension Scheme: Benefits are tax-free
  • Capital gains from property transfers and Sanchayapatra interest are to be treated as final settlement taxes

Compliance & Digital Record-Keeping:

  • Mandatory use of ERP systems or approved VAT software for VAT record maintenance.
  • Quarterly submission of withholding tax returns (replacing monthly returns).

Reference/Citation

Finance Ordinance 2025

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