Bangladesh Tax Treaties with China

Bangladesh has signed Double Taxation Avoidance Agreements (DTAA) with China.
In Bangladesh, transactions involving persons having interest between countries with which Bangladesh has a DTAA, there are agreed rates of tax and jurisdiction on specified types of income.
Therefore, tax relief is provided for those person residents from China.
Evershine provides China Parent company to apply for tax relief according to DTAA between Bangladesh and China.

Email: dac4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, Dhaka, 110067, Bangladesh
Manager Punit Singh Negi , speak in Bangladeshn and English.
Skype: cspunitnegi

CN-Q-10:

中國母公司在孟加拉是否可以依DTA申請沒有常設機構(PE)下零稅率?
China Parent Company, can apply for zero tax rate without PE under DTA in Bangladesh?

CN-A-10:

Yes.
China has DTA with Bangladesh, and if China Legal Resident company is without PE (Permanent Establishment), it will be deemed as “non-Bangladesh Domestic Sourced Income”.
That means Bangladesh will levy zero-tax.
However, China Legal Resident company still need to send zero-tax application to Bangladesh Tax Bureau for being approved.

CN-Q-20:

中國母公司在孟加拉設立了孟加拉子公司， 中國母公司替子公司服務收入能否申請零稅率?
When China Parent Company as an Investor, setup a Bangladesh subsidiary, and provide services from China to Bangladesh Subsidiary, can apply for zero tax rate without PE under DTA in Bangladesh?

CN-A-20:

According to DTA Article 5 item 7, a Bangladesh subsidiary will not be treated as PE of China Parent company as an investor because it is a separate legal entity.
That means if a Bangladesh Subsidiary pay service fee to China Parent Company through service contract signed between subsidiary and China Parent company
as an investor, China Parent Company can apply zero tax.
As for if paid amount being reasonable, it will get involved TP (Transfer Pricing) judgement by Bangladesh Tax Bureau.

CN-Q-30:  

孟加拉依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for Bangladesh to apply for zero tax rate under DTA without PE?

CN-A-30:

In the event the DTA provides for exemption from Bangladesh tax on any income which is otherwise subject to withholding tax under the Ordinance, the Bangladesh-resident taxpayer must pay that income to the resident of the other country without any deduction of tax, subject to notification or direction by the NBR.
The NBR will issue a certificate, on application by the nonresident recipient of that income, within 30 days to verify that the nonresident recipient is exempt from taxation or subject to a reduced rate in Bangladesh under the relevant DTA.

Form for application for a certificate to deduct tax at a lesser rate is “Application for a Certificate under section 51(2) of the Income Tax Ordinance, 1984 (XXXVI of 1984)”.

CN-Q-40:  

中國母公司有孟加拉來源所得的各項所得扣繳稅率為何?
When China Resident company having Bangladesh domestic sourced income, what are the withholding tax rates for various incomes in Bangladesh?

CN-A-40:

China has DTA with Bangladesh, and if you are with PE (Permanent Establishment) in Bangladesh, your income will be considered as Bangladesh domestic sourced income.
As for levying Tax Rate, please be aware:
if Bangladesh Tax rate > DTA Rate, adopt DTA Rate; if Bangladesh Tax rate < DTA Rate, adopt Bangladesh Rate.

If DTA applied, the DTA rates between China and Bangladesh are as below:

*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

CN-Q-50

當中國稅務居民有孟加拉來源所得，依DTA優惠稅率申請的程序為何?
When China Tax Resident having Bangladesh domestic sourced income, what is Bangladesh’s application procedure based on the DTA preferential tax rate?

CN-A-50:

In the event the DTA provides for exemption from Bangladesh tax on any income which is otherwise subject to withholding tax under the Ordinance, the Bangladesh-resident taxpayer must pay that income to the resident of the other country without any deduction of tax, subject to notification or direction by the NBR.
The NBR will issue a certificate, on application by the nonresident recipient of that income, within 30 days to verify that the nonresident recipient is exempt from taxation or subject to a reduced rate in Bangladesh under the relevant DTA.
The form for application for a certificate to deduct tax at a lesser rate is “Application for a Certificate under section 51(2) of the Income Tax Ordinance, 1984 (XXXVI of 1984)”.

Summary of TAX TREATY between Bangladesh and CHINA

The Government of The People’s Republic of China and The Government of The People’s Republic of Bangladesh concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 12 September 1996 and takes effects from 1 January 1998.

Permanent Establishment

Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:
*A place of management
*A branch
*An office
*A factory
*A workshop

*The furnishing of consultancy services through employees or other personnel for periods aggregating more than 6 months within 12 months period.

Withholding Tax

*Article 7 of DTA between Bangladesh and China explained, Bangladesh may not tax payments on business profits rendered by China corporation unless it is attributable to the permanent establishment situated in the relevant territory.

*In Article 10, dividends paid by Bangladesh company to a resident of China shall be charged at 10%.

*Article 11 states that interest arising in Bangladesh may be taxed in Bangladesh according to the laws applicable in Bangladesh, the tax so charged shall not exceed 10% of the gross amount of the interest.

*Article 12 explained royalties means payment for (a) the use of, or the right to use, any copyright of literary, artistic, or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, know-how, trademark, design or model, plan, secret formula, or process; (b) the use of, or the right to use, industrial, commercial, or scientific equipment; or (c) information concerning industrial, commercial or scientific experience.

*Technical services are covered by the business profits in Article 7. Bangladesh corporations may not tax payments for technical services rendered by a China enterprise unless it is attributable to PE.
Technical services rendered in an independent capacity should be covered in Article 14 (see professional services) instead.

*A professional service or other activities provided by individuals of an independent character was explained in Article 14. Bangladesh corporations may not tax payments for professional service rendered by a China resident unless the China resident has a fixed place or stay in Bangladesh for 183 days or more.
An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants.

Elimination of Double Taxation

Article 23 of the DTA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory. It shall be credited against the tax levied in the first-mentioned territory on that resident. However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 26 states that the competent authorities of the territories shall exchange such information (including documents or certified copies of the documents) relevant to the provision of this Agreement.

Please be aware  below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us
Dhaka Evershine BPO Service Limited Corp.
Email: dac4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, Dhaka, 110067, Bangladesh
Manager Punit Singh Negi , speak in Bangladeshn and English.
Skype: cspunitnegi
or
For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System,
please send an email to HQ4dac@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
LinkedIn address: Dale Chen

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(version: 2024/07)

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