Withholding tax (WHT) refers to the income tax that a payer (either resident or non-resident) is obligated to deduct at the source when making certain specified payments. This mechanism ensures tax collection at the point of payment, streamlining the process for both the payer and the government.
Key Aspects of Withholding Tax in Bangladesh
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Obligation to Withhold: Payers are required to withhold tax when making payments such as salaries, execution of contracts, supply of goods, manufacturing, printing, royalties, services, commissions, rent, dividends, and payments to non-residents. NBR Bangladesh
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Withholder Identification Number: Every person responsible for deducting or collecting tax must obtain a Withholder Identification Number. Worldwide Tax Summaries Online
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Filing Returns: Entities must file a Return of Withholding Taxes under Section 75A of the Income Tax Ordinance, 1984. The first return is due by January 31 of the financial year in which the deduction or collection was made, and the second return by July 31 of the following financial year.
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Schedules and Documentation: Specific schedules (e.g., 24AA, 24AB, 24AC) must be attached to the return, detailing the sources and amounts of tax withheld.
This system ensures that the government receives tax revenues promptly and reduces the burden on taxpayers by collecting taxes at the source of income.