Transfer pricing - Bangladesh

The National Board of Revenue (NBR) has adopted transfer pricing regulations/rules by incorporating a chapter on transfer pricing in its Income Tax Ordinance (Chapter XIA) through Finance Act 2012. Aim of the new rules is to ensure that profits taxable in Bangladesh are not transferred to foreign countries (especially in low –taxation countries) or understated (or losses overstated) by manipulating intra-company/related company transactions. Transfer pricing regulations in Bangladesh have been made effective from 1 July 2014 by SRO 161-Law/Income Tax/2014.

The NBR has established a Transfer Pricing Cell to audit transactions by firms. This cell has been working to educate tax officers and tax payers about the newly introduced transfer pricing regulations as well as to create awareness among the stakeholders.

The NBR has also adopted Customs Valuation (Determination of the Value of Imported Goods) Rules, 2000 in a bid to determine the arm’s length pricing of any transactions (i.e. price actually paid or payable -the transaction value) instead of using discretionary practices of determining prices. The Customs authorities also ask for supporting documentation to confirm the information contained in the value declaration.

Scope of Legislations

The compliance requirements under transfer pricing regulations in Bangladesh include submission of TP return in a prescribed form, maintenance of transfer pricing documentation, and obtaining certificate from an Accountant in certain circumstances. If a company fails to comply with the requirement and regulation of Transfer Pricing, a range of financial penalties will be applicable depending on the nature and extent of the non-compliance.

  • As per section 107EE of the Act, every person who has entered into an international transaction shall furnish, along with the return of income, a statement of international transactions in the form and manner as may be prescribed.

  • The Deputy Commissioner of Taxes may, by notice in writing, require that a person who has entered into international transaction or transactions the aggregate value of which, as recorded in the books of accounts, exceeds three crore taka during an income year shall furnish within the period as may be specified in the notice and in the form and manner as may be prescribed, a report from a Chartered Accountant or a Cost and Management Accountant regarding all or of a part of the information, documents and records furnished under section 107E.

  • As per rules, any international transaction above Taka 3 crore by a multinational or its associated entities from Bangladesh will come under scrutiny of the NBR. A report from a chartered accountant will have to be submitted to the NBR for transactions above Tk. 3 crore in a financial year.

  • Where any person fails to keep, maintain or furnish any information or documents or records as required by section 107D of this Ordinance, without prejudice to the provisions of Chapter XV of this Ordinance, the Deputy Commissioner of Taxes may impose upon such person a penalty not exceeding one per cent of the value of each international transaction entered into by such person.

    Where any person fails to furnish a report from a Chartered Accountant as required by section 107F of Income Tax Ordinance, the Deputy Commissioner of Taxes may impose upon such person a penalty of a sum not exceeding three lakh taka.

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Mosttafa Shazzad Hasan [FCA, CPA, MBA, LL.B., PhD]

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Mosttafa Shazzad Hasan is a professional accountant, forensic accounting & investigation expert and corporate lawyer working as business advisor, auditor, taxation advisor, corporate legal expert and financial investigator. He has a long hands-on corporate experience in financial administration, project management and business modeling.

Mr. Shazzad has qualified as Chartered Accountant from The Institute of Chartered Accountants of Bangladesh (ICAB) and CPA from Certified Public Accountants Institute of Ireland.  He has studied BBA and MBA in Finance from University of Chittagong and has qualified Bachelor of Laws (LL.B.) from National University of Bangladesh. He has obtained his Diploma in Forensic Accounting from Bentwood College of UK and doing PhD research in Forensic Accounting.

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