[See section 144 (4)]


1. Definitions.-

(1) In this Schedule,-

(a)  "Bangladesh  tax"  means  income  tax  charged in  accordance  with the provisions of the Income Tax Ordinance,1984 ;

(b) "foreign tax" means, in relation to any country an agreement with the Government of which has effect by virtue of section 144 of this Ordinance,  any  tax  chargeable  under  the  laws  of  that  country  for which credit may be allowed under the agreement ;

(c) "foreign income tax" means any foreign tax which corresponds to income tax.

(2)  Where,  an  agreement  having  effect  by  virtue  of  the  said  section  144, provides for any tax chargeable under the laws of the country concerned being treated  as  income  tax,  that  tax  shall  be  treated  as  foreign  tax  or  foreign  tax other than foreign income tax, as the case may be.

(3) Any reference in this Schedule to foreign tax or foreign income tax   shall be  construed,  in  relation  to  credit  to  be  allowed  under  any  agreement,  as  a reference  only  to  tax  chargeable  under  the  laws  of  the  country  with  the Government of which the agreement was made.

2. Credit against Bangladesh tax.- 

Subject to the provisions of this Schedule, where,  under  an  agreement  concluded  under  section  144,  credit  is  to  be allowed  against  Bangladesh  tax  chargeable  in  respect  of  any  income,  the amount of the Bangladesh taxes so chargeable shall, subject to the provisions of the said agreement, be reduced by the amount of the credit.

3. Credit admissible to residents.-

Credit shall not be allowed against income tax for any year of assessment unless the persons in  respect of whose income the tax is chargeable is resident for the period on the basis of which income is assessed.

4.   Computation of credit.- 

The amount of the credit to be allowed for foreign tax  against  Bangladesh  tax  in  respect  of  any  income  shall  not  exceed  the amount which would be arrived at by applying the average rate of such tax to the doubly taxed income.

5.   Effect  on  computation  of  income  on  allowance  of  credit.-

(1)  Where  the income  includes  a  dividend  and,  under  the  agreement,  foreign  tax,  whether chargeable directly or by deduction in respect of the dividend or not, is to be taken into account in considering whether any, and if so, how much, credit is to  be  allowed  against  the  Bangladesh  tax  in  respect  of  the  dividend,  the amount  of  the  income  shall  be  treated  as  increased  by  the  amount  of  the foreign tax appropriate to the dividend which falls to be taken into account in computing the amount of the credit.

(2) Where the amount of the income is to be treated as increased under sub paragraph (1), the foreign tax not chargeable directly or by deduction which is to  be  taken  into  account,  shall  be  so  much  as  borne  by  the  body  corporate paying the dividend upon the profits for the period for which the dividend is paid, or, if the dividend is not paid for a specified period, the profits of the last period for which accounts of the body corporate were made up which ended before the dividend became payable.

Explanation.- In this sub-paragraph "paid" means paid, credited or distributed or deemed to have been paid, credited or distributed.

(3)  Notwithstanding  anything  contained  in  the  preceding  provisions  of  this paragraph  and  in  section  30,  where  part  of  the foreign  tax  in  respect  of  the income cannot be allowed as a credit against the Bangladesh tax, t he amount of the income shall be treated for the purposes of income tax as reduced by that part of that foreign tax.

(4)  Where  the  income  tax  payable  depends  on  the  amount  received  in Bangladesh the said amount shall be treated as increased by the amount of the credit allowable against income tax.

(5) In computing the total income of a person for the purpose of determining the rate mentioned in paragraph 4, sub-paragraph (1) and (3) of this paragraph shall not apply, and for the reference in sub-paragraph (4) of this paragraph, to the  amount  of  the  credit  allowance  against  income  tax,  there  shall  be substituted  a  reference  to  the  amount  of  the  foreign  tax  in  respect  of  the income.

6. Limitation for claim.-

(1) Subject to the provisions of sub-paragraph (2), any claim  for  an  allowance  by  way  of  credit  for  foreign  tax  in  respect  of  any income shall be made to the Deputy Commissioner of Taxes of the district in which the claimant is chargeable to income tax not later than two years from the end of the year of assessment for which that income falls to be charged to Bangladesh tax or would fall so to be charged if any such tax were chargeable in respect thereof.

(2) Where, the amount of any credit given under the agreement is rendered excessive or insufficient by reason of any adjustment of the amount of any tax payable either in Bangladesh or under the laws of any other country, nothing in the Ordinance limiting the time for the making of ass essment or claims for refund shall apply to any assessment or claim to which the adjustment gives rise, being an assessment or claim made not later than two years from the time when  all  such  assessment,  adjustments  and  other  determinations  have  been made  whether  in  Bangladesh  or  elsewhere,  as  are  material  in  determining whether any, and if so, how much, credit falls to be given.

7. Appeal.- 

A  person  claiming  an  allowance  by  way  of  credit  for  foreign  tax may  appeal  to  the  Appellate  Joint  Commissioner  against  any  order  of  the Deputy Commissioner of Taxes disallowing the claim either wholly or in part, within thirty days of the date on which the order of the Deputy Commissioner of  Taxes  was  communicated  to  the  claimant,  and  the  provisions  of  Chapter XIX  of  the  Ordinance  shall,  with  the  necessary  modifications,  apply accordingly.

8. Provisions as to the deduction of tax at source.-

(1) The provisions of this paragraph shall have effect where an agreement having effect under section 144 of the Ordinance provides for the exemption from Bangladesh tax of any class  of  income  arising  to  persons  resident  in  the  country  with  the Government  of  which  the  agreement  is  made,  being  income  from  which deduction of tax is required to be made under the Ordinance.

(2)  Any  person  who  pays  income  of  any  such  class  (referred  to  in  this paragraph as "the Bangladesh payer") to a person in the said country who is beneficially  entitled  to  the  income  (such  person  being  referred  to  in  this paragraph as "the non-resident") may be required, by notice given by or under the direction of the Board, to pay any such income to the non-resident without deduction of tax, and where such notice is given, any income from any source specified in the notice, being income for a year for which the agreement has effect,  which  the  Bangladesh  payer,  the  date  on  which  the  notice  was communicated,  pays  to  the  non-resident  whose  name  is  specified  therein,
shall, subject to the  following  provisions  of  this  paragraph,  be  paid  without deduction of tax.

(3)  Any  notice  given  under  sub-paragraph  (2)  may  be  expressed  to become ineffective if certain specified events happen or, whether so expressed or not, may be cancelled by a notice of cancellation  given by or under the direction of the Board, and if, to the knowledge of the Bangladesh payer, any of those events happens or if such notice of cancellation is given, any payment made to the non-resident by the Bangladesh payer after the happening of that   event becomes  known  to  the  Bangladesh  payer,  or  after  the  date  on  which  that notice was communicated to the Bangladesh payer, as the case may be, shall be subject to deduction of tax in accordance with the Ordinance.

(4) If it is discovered, after a notice has been given under sub-paragraph (2) that  the  non-resident  is  not  entitled  to  exemption  from  tax  in  respect  of income  from  any  source  specified  in  the  notice,  any  tax  which,  but  for  the notice,  would  have  been  deductible  from  any  payment  made  to  the  nonresident by the Bangladesh payer but by virtue of the notice has not been so deducted shall, if a deduction to that effect is given by or under the direction of the Board, be deducted by the Bangladesh payer out of so much of the first payment made to the non-resident after the date on which the direction was communicated to the Bangladesh payer as remains after the deduction of any
tax deductible therefrom under the Ordinance, and any balance which cannot be deducted out of the first such payment shall be deducted, subject to the same limitation, out of the next such payment, and so on, until the whole of the tax (the amount of which shall be specified in the direction) has been deducted.

(5)  Any  tax  which  the  Bangladesh  payer  is  required  to  deduct  under  subparagraph (4) shall be paid to the Government and the provisions of Chapter VII  of  the  Ordinance  relating  to  deduction  of  tax  at  source  shall,  with necessary modifications, apply accordingly.

(6) A notice may be given under sub-paragraph (2) where income is paid to a person  authorized  to receive such income on behalf of a non-resident, and in such  a  case,  the  reference  in  this  paragraph  to  payment  to  the  non-resident shall be treated as including references to payment to that person.



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