VAT exemptions contributing to low VAT-GDP ratio

The launch of the Universal Pension Scheme in August has raised concerns regarding tax exemptions for pension scheme contributions. Stakeholders are seeking clarification from the National Board of Revenue (NBR) on the tax treatment of these investments.

Bangladesh Bank has addressed concerns regarding tax at source for freelancers, clarifying that IT freelancers do not need to pay tax at source on their remittances. The central bank issued a circular to provide clarity on this matter, dispelling speculations circulating on social media.

The new Income Tax Law-2023 has granted tax officials the authority to disclose information about undeclared assets and income of tax evaders identified through investigations or inspections in the current financial year. This provision is aimed at enhancing tax collection efforts by publicly shaming tax evaders as a deterrent.

The government is set to reduce source tax rates and change its collection method for land registration. Finance ministry officials indicate that the highest source tax rate may decrease from the current 8% to a range of 5%-6%, with proportional reductions for other rates.

Hong Kong and Bangladesh have signed a comprehensive double taxation arrangement (DTA), aligned with the OECD's 2017 Model Tax Convention on Income and Capital. Under this DTA, companies will be considered tax residents of Hong Kong if their primary management or control operations are based there. The DTA also introduces a "place of effective management" test for tax residency determination.

The National Board of Revenue (NBR) is prepared to consider necessary amendments to the tax law based on stakeholder recommendations, as mentioned by the NBR Chairman during a recent event focused on the "Income Tax Act, 2023."