This April 2024 Tax News Flash from Rahman Rahman Huq explains the income tax position in Bangladesh on interest paid on foreign borrowings and on interest relating to Offshore Banking Units (OBUs).

An income tax exemption on interest on foreign borrowings, subject to certain conditions, was available until 30 June 2023. The National Board of Revenue (NBR) has since granted the exemption again. The renewed exemption runs from 28 November 2023 to 31 December 2024, and it is available only where a withholding tax exemption certificate has been obtained. In practice, this means interest paid to foreign lenders within that window can be paid without income tax, provided the certificate is in place.

Separately, interest on deposits with Offshore Banking Units and on foreign borrowings of OBUs has been exempted from income tax with no time limit. For the OBU exemption, NBR has not stated any condition requiring a separate withholding tax exemption certificate. The news flash therefore distinguishes between two regimes: a time-bound exemption for general foreign borrowings that depends on a certificate, and an open-ended exemption for OBU deposits and borrowings with no certificate requirement mentioned.