Bangladesh Income Tax Rate Guide 2025-2026
An exhaustive guide to the latest income tax rates, corporate tax, VAT, and duties in Bangladesh for the 2025-26 assessment year, based on the Finance Ordinance 2025. This guide is essential for individual taxpayers, businesses, and foreign investors. For a comprehensive overview, see the Bangladesh Tax Guide 2025-2026.
Individual Income Tax Rates & Slabs in Bangladesh
1. Income Tax Slabs for Individual Taxpayers (Residents)
The income tax rate for individuals in Bangladesh is progressive. Below are the effective tax slabs for the assessment year 2025-26 and the proposed changes for future years. For personalized assistance, refer to our Bangladesh Personal Tax Guide.
AY 2025-26 (Effective)
| Income Bracket (BDT) | Rate |
|---|---|
| First 350,000 | 0% |
| Next 100,000 | 5% |
| Next 400,000 | 10% |
| Next 500,000 | 15% |
| Next 500,000 | 20% |
| Next 2,000,000 | 25% |
| Balance | 30% |
AY 2026-27 & 2027-28 (Proposed)
| Income Bracket (BDT) | Rate |
|---|---|
| First 375,000 | 0% |
| Next 300,000 | 10% |
| Next 400,000 | 15% |
| Next 500,000 | 20% |
| Next 2,000,000 | 25% |
| Balance | 30% |
Tax-Free Thresholds
| Taxpayer Category | AY 25-26 | AY 26-28 |
|---|---|---|
| General | 350k | 375k |
| Women/Senior (65+) | 400k | 425k |
| Third Gender | 475k | 500k |
| Disabled | 475k | 500k |
| Freedom Fighter | 500k | 525k |
2. Non-Resident Tax & Surcharges
Tax Rate for Non-Residents
Non-residents (other than Bangladeshi non-residents) pay tax at a flat rate of 30% on total income. A Tax Residency Certificate can be crucial in determining status.
4. Surcharge on Net Worth
| Net Worth (BDT) | Rate |
|---|---|
| > 40M to 100M | 10% |
| > 100M to 200M | 20% |
| > 200M to 500M | 30% |
| > 500M | 35% |
5. Environment Surcharge
| Engine Capacity | Surcharge (BDT) |
|---|---|
| Up to 1500cc | 25,000 |
| 1501-2000cc | 50,000 |
| > 2000cc | 75,000+ |
Compliance, Rebates & Penalties
Income Tax Penalties
Penalty for Non-Submission of Return
Failure to submit the Income Tax Return on time incurs the following penalties:
- An immediate penalty of 10% of the tax on the last assessed income (with a minimum of BDT 1,000).
- A further penalty of BDT 50 for each day the default continues.
- The total penalty shall not exceed BDT 5,000 for a new assessee.
- For a previously assessed individual, the penalty shall not exceed 50% of the tax on the last assessed income or BDT 1,000, whichever is higher.
VAT Penalties (Decreased)
The Finance Ordinance 2025 proposes a decrease in several VAT-related penalties.
| Particulars of Irregularity | Existing Penalty | Proposed Penalty |
|---|---|---|
| Non-submission of monthly VAT return within the due time | BDT 5,000 | BDT 2,000 |
| Irregularity of input VAT credit | Min 50% to Max 100% of disputed amount | Min 30% to Max 50% of disputed amount |
| Irregularity in supply of exempted goods/services under SRO | BDT 100,000 for non-compliance | BDT 25,000 for non-compliance |
Investment Rebate & Asset Statements
Understanding rebates and compliance is key. For a detailed breakdown, see the individual tax return guide or use an Income Tax Calculator for Bangladesh for estimates.
6. Investment Tax Rebate
An individual is eligible to avail investment tax rebate which is the **lowest** of the following:
- 3% of total taxable income, or
- 15% of actual eligible investment, or
- Taka 1 million
7. Statement of Assets, Liabilities and Lifestyle
An individual must submit this statement if they:
- Have gross wealth over Taka 4 million;
- Own a motor car;
- Have invested in house property in a city corporation area;
- Are a shareholder director of a Company; or
- Have any property outside Bangladesh.
Corporate Tax Rates & Regulations in Bangladesh
8. Tax Rates for Corporate and Firms (AY 2025-26, 2026-27, 2027-28)
Corporate tax rates vary by company type, listing status, and other conditions. For a complete breakdown, refer to the official Bangladesh Company Tax Guide.
| Companies and Firms | AY 2025-26 (Effective) | AY 2026-27 (Proposed) | AY 2027-28 (Proposed) |
|---|---|---|---|
| Publicly traded companies listed > 10% of paid-up capital through IPO | 20%* | 20%* | 20%* |
| Publicly traded companies listed 10% or less of paid-up capital through IPO | 22.5%* | Not specified | Not specified |
| One-person company | 25%* | Not specified | Not specified |
| Non-listed companies | 27.5% | 27.5% | 27.5% |
| Banks, insurance and other financial institutions (if publicly listed) | 37.5% | 37.5% | 37.5% |
| Banks, insurance and other financial institutions (if not publicly listed) | 40% | 40% | 40% |
| Merchant banks | 37.5% | Not specified | Not specified |
| Cigarette, zarda, bidi, gul or any other tobacco product manufacturer | 45% (+2.5% Surcharge) | 45% (+2.5% Surcharge) | 45% (+2.5% Surcharge) |
| Mobile phone operator company (if not publicly listed) | 45% | 45% | 45% |
| Mobile phone operator company (publicly traded, ≥ 10% shares) | 40% | 40% | 40% |
| Trust, Association of persons, and firms | 27.5% | 27.5% | 27.5% |
| Co-operative society | 20% | 20% | 20% |
| Private university, private medical/dental/engineering college | 15% | 15% | 15% |
*Rates conditional on all income, receipts, and expenses/investments over specified limits being conducted via bank transfer. Business setup is managed by the Registrar of Joint Stock Companies and Firms (RJSC).
12. Inadmissible Expenses & Transfer Pricing
Key inadmissible expenses include excess perquisites (>2M BDT), high royalty fees, and salary/rent not paid via bank transfer. For related party transactions, it's crucial to follow the official Transfer Pricing Policy.
15. Minimum Tax Rules
The minimum tax rate on gross receipts is now 1.5% for mobile operators and 1% for most other sectors. Excess minimum tax paid can be carried forward and offset in a subsequent year. To avoid issues, companies can seek to understand the Double Taxation Policy.
Investment, Capital Gains & Dividends: Resident vs. Non-Resident
11. Capital Gains Tax (CGT) Comparison
For Residents & Companies
- Companies, Funds, Trusts: Flat rate of 15% on all capital gains.
- Individuals (Listed Shares): Gains taxed at 15%.
- Individuals (Other Assets):
- Held for 5 years or less: Gain added to total income and taxed at regular slab rates.
- Held for more than 5 years: Gain taxed at a flat 15%.
- Sponsor/Director Shareholders: Tax on transfer of securities increased to 10% (from 5%).
For Non-Residents
- Gains from Listed Company Shares: Taxed at a flat rate of 10%.
- Gains from Other Capital Assets: Taxed at a flat rate of 15%.
- Tax Exemption Condition: Gains may be exempt if the non-resident's home country provides a similar tax exemption for Bangladeshis.
Dividend & Interest Income Tax Comparison
For individuals, the first BDT 25,000 of dividend income is tax-free. Tax is withheld at source (WHT) on the excess amount and on interest income based on the recipient's status.
| Recipient Type | Dividend WHT Rate | Interest WHT Rate |
|---|---|---|
| Resident Individual (with 12-digit TIN) | 10% | 10% |
| Resident Individual (without 12-digit TIN) | 15% | 15% |
| Non-Resident Foreigner | 30% | 20% |
| Company, Trust, Association of Persons | N/A (Taxed as income) | 20% |
Business Entry, Fund Repatriation, and Exit Strategy
Foreign investors must navigate specific legal frameworks for operating in Bangladesh. Key considerations include:
- Business Entry Options
Understand the process with the Guide to Foreign Company Incorporation or explore a full incorporation package.
- Fund Repatriation
Learn the rules for Fund Repatriation by Non-Residents and foreign investors.
- Exit Options for Investors
Plan your exit strategy by reviewing the Exit Option Policy for Foreigners.
Withholding Tax (WHT/AIT) Rates in Bangladesh
| Source of Payment | Recipient | Rate |
|---|---|---|
| Professional or Consultant Services | Resident Natural Person | 15% |
| Non-Resident Natural Person | 20% | |
| Contract for manufacturing, construction etc. | Resident | 5% |
| Payment against Local LC (credit facility) | Distributor | 1.5% |
| Supply of Grocery Items | Supplier | 0.5% |
| Payment to Welfare/Participation Fund | Beneficiaries | 10% |
| Income remitted from abroad (fees, commission) | Resident | 7.5% |
VAT, Supplementary Duty & Excise Duty
Key VAT Rate Changes for 2025-26
| Item/Service | Change |
|---|---|
| Online goods sale | 5% to 15% |
| Construction service | 7.5% to 10% |
| MS Product (Complete) | 2200 to 2700 /MT |
| Aircraft Lease Rent | 15% to Exempted |
SD & Excise Duty Changes
| Item/Service | Type | Change |
|---|---|---|
| Cigarette Paper | SD (Import) | 150% to 300% |
| OTT Platforms | SD (Service) | 0% to 10% |
| Bank Account (Balance > 3 Lakh) | Excise | Threshold raised |
Industry-wise VAT Exemption Benefits
| Industry/Item | Details | Period |
|---|---|---|
| Refrigerator, AC | Exemption removed. VAT rate changed to 15%. | - |
| Local E-bike Manufacturer | Output VAT at 5% | Jul 2025 - Jun 2030 |
| Medical Bed Manufacturing | Output VAT exemption. | Up to 30 Jun 2030 |
| Mobile Phone Manufacturing | Assembler/Component VAT from 5% to 7.5% | Until Jun 2027 |
| API Manufacturing | Output VAT Exempted. | Until Jun 2030 |
Key Government Resources & Authorities
For official information and compliance, please refer to the websites of the key government bodies regulating tax and investment in Bangladesh.
