IT & Software Sector under the Income Tax Act 2023 of Bangladesh
The Information Technology (IT) and Software sector is one of the fastest-growing industries in Bangladesh. To promote digital transformation and encourage innovation, the Income Tax Act 2023 provides several tax benefits and guidelines for IT and software companies.
Tax Exemptions and Incentives
Under the Act, income from approved IT-enabled services (ITES) and software development is exempt from income tax up to a specified period. As of now, the exemption is available until June 30, 2027, but companies must meet specific conditions to qualify.
The list of eligible services includes:
- Software development and maintenance
- Website development and hosting
- Mobile application development
- Digital content development
- Data processing and outsourcing
- Cloud services
- Cybersecurity services
This exemption aims to encourage local and international IT investments in Bangladesh.
Conditions for Tax Benefits
To enjoy the tax exemption:
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Companies must be registered with the Bangladesh Hi-Tech Park Authority (BHTPA) or the Bangladesh Computer Council (BCC).
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Proper documentation and certification of IT services are required.
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Annual returns must be filed even if the income is tax-exempt.
Failure to meet these conditions can result in losing the exemption privilege.
Withholding Tax (TDS) Responsibilities
Even tax-exempt IT and software companies must:
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Deduct tax at source when making payments for salaries, rent, or professional services.
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Maintain proper TDS records and deposit taxes on time.
Conclusion
The Income Tax Act 2023 reflects Bangladesh's commitment to building a strong digital economy. By offering tax exemptions and encouraging innovation, the government supports IT entrepreneurs and software companies. However, companies must ensure strict compliance with all regulations to continue enjoying these benefits and contribute to the nation's technological advancement.
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