Finance Bill 2014

JOYDEB DUTTA, ACA, FCMA Personal Tax Page | 1

01755-621692
Abridged Version
of
Finance Bill- 2014
Finance Bill 2014
JOYDEB DUTTA, ACA, FCMA Personal Tax Page | 1
01755-621692




Personal Tax

Finance Bill 2014
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01755-621692
PERSONAL TAX
i

1. Proposed Tax rate for Non-Corporate Tax payers (Individuals & Firms):
PaP Particulars Proposed (FY 2014-15) Existing (FY 2013-14)
Slab Rate Slab Rate
On First Tk. 220,000 Nil 220,000 Nil
On Next Tk. 300,000 10% 300,000 10%
On Next Tk. 400,000 15% 400,000 15%
On Next Tk. 500,000 20% 300,000 20%
On Next Tk. 3,000,000 25% 3,000,000 25%
On Balance TK. Balance 30% Balance 25%
Non-Resident other than Bangladesh non-Residents 30% 25%
2. Proposal of Income threshold for Individual Tax-Payers:
Status
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
Tax exempted income threshold 220,000 220,000
Women and aged taxpayers (65 years of age & above) 275,000 250,000
Physically Challenged 375,000 300,000
War- wounded Gazetted Freedom Fighter 400,000 Not specified

3. Proposal of Minimum Tax for Individual Taxpayers Based on Location:
Status
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
City Corporation Area 3,000 3,000
Paurashava 2,000 2,000
Other Areas 1,000 1,000

4. Charge of surcharge
Issues
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
Net Wealth worth of Tk. 20 Million to Tk. 100 Million 10% 10%
Net Wealth worth of Tk. 100 Million to Tk. 200 Million 15% 15%
Net Wealth worth of Tk. 200 Million to Tk. 300 Million 20% 15%
Net Wealth exceeding Tk. 300 Million 30% 15%


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01755-621692
5. Investment allowance
An assesse would get tax rebate of 15% on lower of:
i) Actual investment, ii) 30% of total income or iii) Tk. 15 Million

6. Proposal of Tax on Investment in House/ Flat:
Location of the Property Rate on per
sq. meter
up to 200
Sq. meter
Rate on per
sq. meter
above 200
Sq. meter
Gulshan Model Town, Banani, Baridhara, Motijheel Commercial Area and Dilkusha
Commercial Area of Dhaka.
5,000/- 7,000/-
Dhanmondi Residential Area, Defence Officers Housing Society (DOHS), Mahakhali,
Lalmatia Housing Society, Uttara Model Town, Bashundhara Residential Area,
Dhaka Cantonment, Kawran Bazar, Bijaynagar, Segunbagicha, Nikunja of Dhaka
and Panchlaish, Khulshi, Agrabad and Nasirabad Area of Chittagong.
4,000/- 5,000/-
Other areas of City Corporation 2,000/- 3,000/-
Paurasabha of any district headquarters 1,000/- 1,500/-
Other Areas including Upazilla 700/
-
1,000/-
More than one house/flat Addition
al
Additional
20%

7. Proposal of Tax on Investment in House/ Flat:
Particulars Tax Rate
Tax Rate on Total Value 10%
In case of more than one Plot/Land additional tax on payable sum (20% higher
of 10% of Tax)
12%

8. Requirement of Audit for Persons:
If gross receipt or sales is more than 50 million from business or profession, the statement of Accounts
needs to be audited either by a Chartered or a Cost & Management Accountant.
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Corporate Tax

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CORPORATE TAX
1. Corporate Tax Rate:
Particulars
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
Publicly Traded Company (other than Bank, Insurance, Mobile Phone
Operator, Cigarette Manufacturing Co), no rebate is allowed even dividend is
paid more than 20% of capital
27.50% 27.50%
Publicly Traded Company pay dividend less than 10% of capital or fail to pay
dividend within the specific time by BSEC
35.00% 37.50%
Non-Publicly Traded Company 35.00% 37.50%
Bank, Insurance and Financial Institution (except Merchant Bank) 42.50% 42.50%
Merchant Bank 37.50% 37.50%
Cigarette Manufacturing
Company

Publicly Traded 40% 40%
Non- Publicly Traded 45% 45%
Mobile Phone Operator
Publicly Traded 40% 40%
Non- Publicly Traded 45% 45%
Dividend Income 20% 20%
Minimum Turnover Tax 0.30% 0.50%

2. Tax Holiday, Exemption & Reduction:

Issues
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
Tax-Holiday for 17 Industrial Undertakings
30 June, 2019 30 June, 2015
Tax-Holiday for 17 Physical Infrastructure
Facilities


15% Tax on Income Derived from production of Jute goods 30 June, 2019 30 June, 2015
15% Tax on Income from Fabric, Dyeing Industry
etc
30 June, 2019 30 June, 2015
50% Tax rebate on Export of Handicrafts 30 June, 2019 30 June, 2015
Tax Exemption in Poultry
Sector
30 June, 2019 30 June, 2015

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3. Tax Exemption Period (S - 46B):
Issues
Proposed
(FY 2014-15)
Existing
(FY 2013-14)

First & Second Year 100% 100%
Third Year 70% 70%
Fourth Year 55% 55%
Fifth Year 40% 40%
Sixth Year 25% 25%
Seventh Year 10%
Eighth- Tenth Year 10%
Pollution-free Hybrid Hoffman Kiln (HHK) brickfields have been proposed to bring under tax- exemption net.

4. Withholding Tax:
Issues
Section /
Sub section
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
Interest on Securitites 51 5% 10%
Fees for Professional & Technical Services 52A TIN (includes Actuarial Service) TIN
Interest on Savings Instrument
52D
Up to 0.5 mil-0%
Above - 5% 5%
Tax from Travel Agent 52JJ 3% 0%
Rental Power 52N 6% 4%
Payment in excess of Premium paid 52T 5% 0%
Payment of Local LC
52U
Up to 0.5 mil-0%,
Above -3% 5%
Mobile company: licence fee, revenue Sharing 52V 10% 0%
Export proceeds of garments 0.30% 0.80%
Export proceeds other than garments 0.60% 0.80%
Export cash subsidy 53DDD 3% 5%
Agency/dealer commission 53E 3% 5%
Transfer of Property

10,80,000/per khatha & Tk
90/per Sft or 4% of deed
whichever is higher 3%
Lease of property 53HH 4% 0%
Online advertisement 53K 3% 0%
Tax from dividend
54
10% when 12 digit TIN
provided, otherwise 15% 10%
Time line for Tax Deposit

Within 2 weeks of following
month
within 3
weeks of
deduction

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5. Certain Contractors excluded from final discharge of Tax Liability:
A Contractor or sub-Contractor to the contractor of an oil company
Oil Marketing Companies and its dealer or agent excluding petrol Pump station
Any Company engaged in Oil Refinery
Any Company engaged in Gas Transmission

6. Capital Market:
Withholding Tax
Section /
Sub section
Proposed (FY 2014-15)
Existing
(FY 2013-14)
Transfer of share of shareholder of Stock
Exchange
53N 15% 0%
Gains of securities traded in the Stock Exchange 53O
Company or firm 10%
Others
Gain between 1 to 2 mil -
3% Above 2 mil - 5%
0%
Dividend Income 54 Exempted up to 15,000
Exempted up
to 10,000

Corporate Social Responsibility (CSR):
Propose to extend tax facility on contribution to any fund created and approved by the government to
help victims of natural disaster and accidents as CSR.
Propose to raise the expenditure limit from Tk. 8o million to Tk.120 million keeping unchanged the existing
condition of allowable limit at 20 percent of total income of any company.
Transfer pricing related Income Tax regulations will be come into force 1 July, 2014.
Capital Assets:
Agricultural land in Bangladesh will also be treated as Capital Assets


Method of Accounting:
For companies, financial statements have to be prepared in accordance with BAS/BFRS and audited by Chartered
Accountants.


Inadmissible Deductions (S - 30)
Allowable limit of excess perquisite is increased to Tk 350,000 than earlier of Tk 250,000.
Payment of House rent other than crossed cheque or bank transfer will be disallowed.
Any expenditure exceeding 10% of net profit disclosed in the statement of accounts under head office
expenses against profit.
Any expenditure by way of royalty expenses, technical services fee, technical know-how fee or technical
assistance fee exceeding 8% of net profit disclosed in the statement of accounts instead of the profit.

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Any expenditure by way of incentive bonus exceeding 10% of net profit disclosed in the statement of accounts
instead of disclosed net profit.



Third Schedule (paragraph 3):
Normal Depreciation Allowance :
Particulars Dep Rate %
Office Equipment 10%
physical infrastructure-
(i) Bridge 2%
(ii) Road 2%
(iii) Fly over 2%
(iv) Pavement runway, taxiway 2.5%
(v) Apron, tarmac 2.5%
(vi) Boarding bridge 10%
(vii) Communication, Navigation aid and other equipments 5%

Third Schedule (paragraph 7B): Accelerated Depreciation allowance on machinery and plant:
Industrial undertaking established between 1 July 2014 and 30 June 2019:
Particulars Dep Rate %
First Year 50%
Second Year 30%
Third Year 20%

Other Reforms
Payment of monthly house rent amounting more than Tk.25 thousand proposed to be made through banks.
Estimated income of Non Resident Contractor & Sub-contractor extended from 10% to 15%
Income from poultry industry exceeding TK 1,50,000/- an amount minimum 10% required to be invested in
purchase of govt. bond & securities within 6 months and hold such bond or securities till maturity of such
bond or securities;
Exemption from return submission: return submission has been exempted if assessee has not been
able to earn taxable income prior to three consecutive years instead of having
Amount of tax payable on the basis of tax payable shown in return or tax payable under 16ccc whichever
is higher.
Section 82BB: Tax return submitted under Universal-self will be exempted from audit if:
Certain conditions are met
20% increase in income is shown on return than last assessed income
Section 128: penalty of 10% is increased to 15%
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Amortization of License Fees:
License Fees paid before July 01, 2012 included in amortization of License fees. Definition of License fees
now includes Spectrum Assignment fees, GSM License Fees, License acquisition or renewal fees.
Sixth schedule (para 48 to 52): Exclusion from total Income
Income earned in abroad are brought as foreign remittance
Donation by cross cheque to girls school or college
Donation to Technical and Vocational Training Institute
Donation on R&D of agriculture
Income up to ten lakh taka realized from transfer of stock or shares of public limited company
Income from agriculture will be exempted up to Tk 200,000
Tax exemption of ITES services is extended up to 2019



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VALUE ADDED TAX (VAT)

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VALUE ADDED TAX (VAT)

VAT Rules and Supplementary Duty Rules, 2013 have been drafted to implement VAT Act 2015 w.e.f 1 July 2015
Online VAT registration will be kicked off from Jan 01, 2015
Online VAT return Submission will be implemented within 30 June 2015

PROPSAL FOR REFORMS IN VDS RATE
Services Code
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
Air Conditioned Launch S 036.10 15% 10%
Air Conditioned Bus S 036.20 15% 10%
Air Conditioned Railway S 036.20 15% 10%
Motor Garage & Workshop S 3.10 7.50% 4.50%
Dockyard S 3.20 7.50% 4.50%
Photograph Maker S 019.00 7.50% 4.50%
English Medium School S 069.00 7.50% 4.50%
Immigration Advisor S 067.00 7.50% 4.50%
Transport Contractor (except Petroleum product carrying contractor
@ 2.25%) services S 048.00 7.50% 4.50%
Land Development S 010.10 3% 1.50%
Jewellery Services S 026.00 3% 2.00%
General Restaurant Service (Not Air Conditioned) S 1.20 7.50% 6.00%

PROPSAL FOR REFORMS IN TRUNCATED RATE
Services Code
Proposed
( FY 2014-15)
Existing
(FY 2013-14)
Restaurant Non Ac S 001.20 7.50% 6.00%
Motor garage/workshop S 003.10 7.50% 4.50%
Dockyard S 003.20 7.50% 4.50%
Land Development Org S 010.10 3% 1.50%
Building Construction Org S 010.20 3% 1.50%
Photo producer S 019.00 7.50% 4.50%
Goldsmith etc S 026.00 3% 2.00%
Carrying Contractor S 048.00 7.50% 4.50%
Immigration consultant S 067.00 7.50% 4.50%
English Medium School S 069.00 7.50% 4.50%


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VAT Withdrawal
Details Code Stage
Kidney Dialysis Solution 3004.90.91 Production
Meditation service S 099.40 Service
Supplier of cow/buffalo bone to Gelatin Capsule S 037.00 Trader
Contraceptive 30.04 Trader
Crushed leather 41.04 to 41.07 Import & Production

VAT Exemption Withdrawal
Details Code Stage
Handmade biscuit and cake Production 19.05 Production
Cellular (mobile/Fixed Wireless) Telephone set 8517.12.10 Import
Ocean going vessel (above 5000 DWT) 89.01 to 89.07 Import & Production

PROPSAL FOR REFORMS IN TARIFF RATE
Details
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
Rate/ Ton Rate/ Ton
Oils other than soya bean and palm 6,667 0
Scrap/Ship Scrap 2000 1500
HR coil to CR Coil 8250 7500
CR Coil to GP/CI Sheet, HR GP/CI Sheet 10% +
MS Product 10% +
GI Wire 10% +


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Other Reforms
Issues
Proposed (FY 2014-15)
Existing (FY 2013-14)
Maximum Penalty 50% of the evaded Tax
Confiscation of
Goods
Environment Protection Surcharge / Green Tax for
industries which pollute the Environment
1% on Ad-valorem basis on
products manufactured
Health Development Surcharge
1% on imported & domestically
produced Tobacco
Price of 25 sticks Non-filter Bidis BDT. 6.14
Price of 20 sticks Non-filter Bidis BDT. 6.94
Supplementary Duty Rate On Jarda And Gul Products 60% 30%

100% export oriented company will not be required to pay Input VAT on (a) procurement
provider, (b) Security service, (c) Carrying contractor and (d) Import of service from outside
Bangladesh
All VAT registered will be required to submit monthly VAT return. Quarterly return has been
withdrawn.
ATV is not required to be paid on (a) passenger airline and its spares, (b) cargo plane, (c)
certain cancer products and (d) equipment sand spares declared to the BOI.

S 007.00 (Advertising Entity) and S 014.00 (Indenting entity) have been excluded from deduction of
VAT at source


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Custom Duty

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CUSTOM DUTY

Pharmaceuticals
Existing Duty @ 10 and 25% on 40 fundamental raw materials have been reduced to 5%
Other duty structure will remain same
Existing Duty @ 10 and 25% on 41 fundamental raw materials of Ayurveda medicine have been reduced
to 5%

Poultry and Livestock
Duty on poultry and livestock against input and raw material has been withdrawn

Paper, Ceramic, Furniture, Plastic, Baby diaper, Electrical and other local industries
Duty @ 10% and 25% has been reduced to 5% to 10%

Duty on import of railway Machinery and equipment has been reduced from 10% to 5%
5% RD will be imposed for importation of 15-16 inches bus tyre
CD will be increased from 10 to 25% for import of by-cycle tube
Tariff Value of crude petroleum will be increased to USD 40 from USD 32
CD @ 5% will be payable for importation of navigation light, Broadcasting equipment and firefighting
equipment
No duty on import of dump truck
No duty for importation of raw material for Prefabricated building, fire resistant door, emergency light,
sprinkler system for RMG
Duty on certain raw material used for RMG reduced
Duty structure on import of vehicle has been reclassified
100 gm gold can be imported Duty free
Increase of duty on iron products and withdraw duty on importation of raw materials for billet, sponge
iron and reduced iron
Change of CD from 25% to 5% on multiplexer, grand master clock for faster internet connectivity
15% CD on import of mobile set
25% CD on import of LPG Cylinder
25% CD on import of Energy Saving Lamp, Electric Fan Motor
Reduction of CD from 25% to 10% for raw materials to produce diaper



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Supplementary Duty & Travel Tax

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SUPPLEMENTARY DUTY
A telecom company will be required to pay SD of Tk 100 per SIM card during replacement
15% SD on locally produced Electric Filament Bulb has been withdrawn.
Significant Reforms have been proposed in the SD structure.


TRAVEL TAX
Details
Proposed
(FY 2014-15)
Existing
(FY 2013-14)
By Air
North America, Europe, Africa, Australia, New
Zealand or Far East 4000 3000
SAARC 1200 1000
Any Other Countries 3000 2500
By Land 500 300
By Sea 800 500