Capital Gains Tax in Bangladesh

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A Leading Capital Gains Tax In Asia & Bangladesh

Capital profit tax, in the general definition, is levied on the profit generated from the sale of capital assets where the value is higher than the purchase price of the asset – a positive difference between the selling price and the original purchase price of the asset.
Capital Gains Tax in Bangladesh

Learn About Bangladesh Capital Gains Tax With Network BD

However, Bangladesh has no capital gains tax: In Bangladesh, sale of shares, fixed assets, invaluable assets, foreign exchange gains in capital transactions etc. are not taxable. Capital gains are taxable only if you are a dealer or trader – this means profits are taxable if a person buys and sells property for profit.

Any profit or gain arising from the transfer of a capital asset shall be accounted to be the income of the year in which the transfer took place, and tax should be payable by an assessee under the head capital gains. Compared to other developing countries, Bangladesh has the strictest tax regime that operates with higher percentage and more complex taxation systems. Moreover, capital gains tax has been introduced in Bangladesh in the year of 2010, leaving the stakeholders, local and overseas portfolio investors about the rate of capital gain tax. 

Capital Gains TAx (CGT) is applied differently on different promoters and primary shares. The Finance Act of 2010 has imposed CGT of 3% from issue of primary share at a premium price, which has been omitted in the Finance Act 2013, imposing collection of CGT 55 on the difference between transfer value and cost of acquisition of the securities or mutual funds units making the stock exchanger responsible for the collection.

The rate of advanced collection o0f CGT is fixed at 10% for the sponsor shareholders and 5% for sponsor shareholders of banks, financial institutes, insurance and other financial companies.

The rate of CGT perplexes the interpreters and creates some confusion regarding this. NetworkBD can help their clients in understanding CGT and determining the tax rate for their clients.

No More Confusion About Capital Gains Tax With Us

 

 

According to National Revenue Board, CGT will be applicable based on different criteria, as such:

 

  1. The rate of advanced collection of CGT is fixed at 10% for the sponsor shareholders, while the rate will be 5% for the sponsor shareholders from financial institutes.
  2. If a company buys a property and sells it after sometime for profit, the asset will be noted as a capital, and will be subjected to tax
  3. For overseas investors and non-resident placement holders the established tax rate is 15% as per the section 56 of income tax ordinance 1984
  4. Disposals of government securities are not subject to capital gains tax, neither are the amounts received for termination of contracts and goodwill.

Our Assistance To Determine The Nature Of Income

Although there are currently no guidelines that clearly describe the nature of such income (whether it be tax-free capital gains or taxable trade income), profit income or income will be made if they are in trade or business activities as defined by the NBR in Bangladesh.
The following are the key considerations for determining whether a property sale / purchase is for profit:
1. The frequency of acquisition and sale of property;
2. Purpose of buying and selling property;
3. Financial means hold property for the long term; And
4. Holding Period Key (Holding period is calculated from the date of purchase of capital assets to the date of sale)
Bangladesh has imposed CGT and it provides a huge strategic change in the country. It allows share prices to boost, increases investment from both local and overseas investors and encourages newer entrepreneurs to grow business and contribute to the economy of the country. It’s become more important to seek a professional and qualified tax advisor to maintain compliance and to ensure maximizing the benefits of CGT. our special team of consultants, accountants and advisors will assist you with it so that you can focus on the growth of your business.

FAQ For Capital Gains Tax in Bangladesh

Who is eligible for capital gains discount?

 Capital gains discount (CGE) is available to individuals only, not corporations, and constitutes a discount from net income (50% of the discount is worth, since 50% of capital gains tax is paid). Benefits that use net income, such as age credit and OAS closeback, will be calculated before the cut is reflected.

How do you qualify for a lifetime capital gains discount?

 Property of merit You or someone related to you must own the shares for at least 24 months. Note that shares of publicly listed companies or mutual funds are not eligible. The second eligible property is the eligible farm property.

Are seniors exempt from capital gains tax?

 When you sell a home, you pay capital gains tax on your profits. There is no discount for senior citizens as they pay tax on sales like everyone else. If the home is a private home and you have lived there for several years, though, you may be able to avoid paying taxes.

Is there an age limit for capital gain?

You cannot claim a capital gain exclusion unless you are over 55 years of age. It was a rule that only taxpayers 55 years of age or older could claim a waiver and even then, the waiver was limited to once in a lifetime.

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