A company car, a flat, a driver, a club membership. None of them arrive in your employee’s bank account, and all of them are taxable salary in Bangladesh.
The Income Tax Act 2023 defines salary broadly enough to catch almost everything of value an employer provides: wages, allowances, bonuses, commissions, perquisites, and other similar payments. Compensation for termination is in. Arrear salary is in. So is a benefit from a past or future employer.
For 2 of the largest benefits, the law sets the value for you rather than leaving it to judgement. A company car is valued at a fixed monthly figure by engine size. Employer-provided accommodation is valued at its full annual value.
We set up perquisite valuation and payroll withholding together under employee benefits and compensation services, inside the NBR filing cycle.
Company car: a fixed monthly value by engine size
The taxable value does not depend on what the car cost, how much it is used, or whether the employee drives it at weekends. It depends on engine capacity alone.
| Engine capacity | Taxable value per month | Per year |
|---|---|---|
| Up to 1,500 cc | BDT 15,000 | BDT 180,000 |
| Over 1,500 cc up to 2,000 cc | BDT 20,000 | BDT 240,000 |
| Over 2,000 cc up to 2,500 cc | BDT 30,000 | BDT 360,000 |
| Over 2,500 cc | BDT 50,000 | BDT 600,000 |
Valuations are taken from the PwC summary of Bangladesh individual income determination, reviewed 31 July 2026.
Crossing 2,500 cc doubles the monthly figure. Moving an executive from a 2,400 cc car to a 2,600 cc car adds BDT 240,000 to their taxable income every year, before anyone has driven anywhere.
That is a car policy decision disguised as a procurement decision. Set the engine-size band deliberately, and tell the employee what it costs them, because the tax lands on their payslip rather than on the company.
Accommodation: valued on the property, not on your cost
Housing is the other benefit with a prescribed valuation, and it catches employers who assume a subsidised rent means a small benefit.
- Employer provides accommodation: the taxable value is the full annual value of the property, or the rent the employer pays
- Employer subsidises the rent: the taxable value is the difference between the annual value and the rent the employee actually pays
Subsidised rent is where the arithmetic surprises people. An employee paying BDT 20,000 a month for a flat with an annual value of BDT 900,000 is taxed on BDT 660,000, not on the BDT 240,000 they contributed.
This matters most for expatriate packages, where company-provided housing in Gulshan or Banani is standard. The residence rules that decide which rate then applies to that income are in the 183-day residence test.
Everything else: monetary or fair market value
Outside cars and accommodation, the rule is simple and wide. Any other perquisite, allowance or benefit is valued at its monetary value, or at fair market value where there is no cash figure.
In practice that reaches:
- Drivers, domestic staff and security provided by the employer
- Club memberships and subscriptions
- School fees paid for an employee’s children
- Utilities settled by the company
- Home leave and travel not connected to business
- Interest-free or subsidised loans
Fair market value means what the benefit would cost in the open market, not what the company negotiated. A corporate rate on a club membership does not reduce the employee’s taxable figure.
Share schemes are taxed when the shares arrive
Equity compensation has its own rule, and the timing is the part to get right.
Where shares are received under an employee share scheme, the taxable income is fair market value on the date of receipt, less the cost of acquiring the shares. It is taxed in the year the share is received, not when it is later sold.
The cost of acquisition is what the employee paid for the shares, or what they paid for the right or opportunity to acquire them.
2 further points are easy to miss:
- If the employee sells the right or opportunity rather than exercising it, the income is the sale price less the cost of acquiring that right
- The rules cover both the “right to acquire shares” and the distribution of profit arising on a transfer of shares or rights by a trust
A group running a global share plan through an employee benefit trust is inside these rules, not outside them. Model the Bangladeshi charge at vesting, because the employee owes tax in a year when no cash has reached them.
What counts as salary, beyond the monthly payment
The definition is wider than most payroll setups assume. Salary includes:
- Wages, allowances, bonuses and commissions
- Perquisites and similar payments
- Arrear salary
- Compensation for termination of employment
- Receipts in lieu of salary, and benefits not directly part of salary
- Amounts or benefits from a past or future employer
That last one is unusual and worth reading twice. A signing bonus paid before the employee starts, and a payment from a former employer after they have left, both fall inside employment income.
The withholding sits with you, not the employee
Bangladeshi tax on salary is collected at source. The employer calculates, deducts, deposits and reports it, and the liability for getting it wrong stays with the employer.
Perquisites are where that goes wrong most often, because the benefit never passes through the payroll run. A car allocated by the admin team, a flat arranged by HR, and school fees paid by finance are 3 separate systems, none of which automatically tells payroll to gross up.
Build a single monthly perquisite schedule that payroll owns. The deduction rates that then apply are in the salary deduction schedule.
4 mistakes with benefits in kind
1. Valuing the car at its running cost
The figure is fixed by engine capacity. Actual cost, mileage and business use make no difference to the taxable value.
2. Taxing only the subsidy the employee receives
For accommodation the charge is the gap between annual value and the rent the employee pays, which is usually far larger than the discount the employer thinks it is giving.
3. Leaving perquisites out of the monthly withholding
Benefits granted outside payroll still carry withholding. Catching them at year end leaves a shortfall and an unhappy employee.
4. Deferring share scheme tax to the sale
Tax arises in the year of receipt, measured at fair market value on that date. A later sale is a separate event.
Getting the valuation right before the payslip
We build the perquisite schedule alongside the payroll run for foreign-owned employers, value cars, housing and share awards under the prescribed rules, and keep the withholding aligned month by month through the Khan Akber Workforce Compliance Framework.
For a review of an expatriate package or a benefits structure you are designing, talk to our team.
Valuations reflect the Income Tax Act 2023 as currently applied. Prescribed figures change with each Finance Act. Confirm the current values with a qualified adviser before running payroll.
Frequently asked questions
How is a company car taxed in Bangladesh?
At a fixed monthly value set by engine capacity: BDT 15,000 up to 1,500 cc, BDT 20,000 up to 2,000 cc, BDT 30,000 up to 2,500 cc, and BDT 50,000 above that. Actual cost and business mileage make no difference.
How is employer-provided accommodation valued for tax in Bangladesh?
At the full annual value of the property, or at the rent the employer pays for it. Where the employee contributes rent themselves, the taxable benefit is the difference between that annual value and the amount the employee actually pays.
Are benefits in kind taxable for employees in Bangladesh?
Yes. Salary is defined to include perquisites, allowances and benefits of every kind. Anything without a prescribed valuation is taxed at its monetary value or at fair market value, including drivers, club memberships, school fees and utilities paid by the employer.
When are employee share scheme shares taxed in Bangladesh?
In the year the shares are received, rather than when they are later sold. The taxable amount is fair market value on the date of receipt, less whatever the employee paid for the shares or for the right to acquire them.
Who is responsible for tax on perquisites in Bangladesh?
The employer carries it. Tax on salary, perquisites included, is deducted at source, and the employer is the one who calculates, deposits and reports the amount. Benefits arranged outside the payroll run still carry exactly the same monthly withholding obligation.
