Corporate tax is a term used to describe a direct tax imposed on the earnings or income of corporations or businesses. It is a type of taxation where the revenue generated by corporations is taxed rather than the income of individuals. A company’s profits are typically used to figure out corporate tax. The Income Tax Ordinance, of 1984 regulates corporate taxation in Bangladesh, and the National Board of Revenue (NBR) is responsible for its implementation.
Both domestic and foreign corporations with branches in Bangladesh must pay corporate tax. Foreign businesses operating in Bangladesh that have permanent offices are also liable to the tax.
Procedure for paying corporate tax
The procedure for paying corporate tax in Bangladesh involves several steps. Here is a general overview of the process:
- Obtaining a Taxpayer Identification Number (TIN): A corporation needs a Taxpayer Identification Number (TIN) in order to pay corporate tax in Bangladesh. This can be obtained by registering with the National Board of Revenue (NBR), which is the taxing authority.
- Maintaining Books of Accounts: Companies must have accurate books of accounts and records and should include financial statements, receipts, invoices, and other pertinent paperwork. These documents will be used to determine the corporation’s tax liabilities and should accurately reflect the company’s financial transactions.
- Preparation of Financial Statements: produce the balance sheet, earnings statement, and profit and loss statement, among other financial documents. These financial statements should reflect the company’s financial status.
- Calculating Taxable Income: A company’s taxable income is calculated by deducting all available deductions, exemptions, and incentives from its total income. These deductions could be made for business-related costs, capital allowances, or certain investments
- Filing Tax Returns: Once the taxable income has been determined, the corporation must submit its yearly tax return to the taxing authorities, usually within a certain timeframe following the end of the tax year. Along with other necessary forms and schedules supplied by the tax authority, the financial statements are included in the tax return.
- Paying Corporate Tax: The corporation must calculate the amount of corporate tax owed based on the taxable income reported in the tax return. The applicable tax rate for the company’s category is often used to determine the tax obligation.
- Advance Tax Payments: Companies in Bangladesh are required to pay advance taxes all during the tax year in addition to the annual tax payment. These payments are made in installments on the basis of an estimated tax liability and are due on particular dates.
- Tax Assessment and Audits: To ensure compliance with tax laws, the tax authorities may perform audits or assessments of taxes. The tax authority may examine the business’s financial records, transactions, and other pertinent documents during an assessment or audit to confirm the accuracy and completeness of the tax return.
Therefore, for complete and current information on the process of paying corporate tax in Bangladesh, it is suggested that you consult with a corporate tax lawyer.