【正文】 ine tax assessment will be made. Taxpayer’s Status: Under the Ine Tax Ordinance, 1984, a taxpayer has two types of status: personal status and residential status. A soleproprietorship has no separate tax paying identity and individual owner running the soleproprietorship will have “Individual” status of the owner and not of the business entity, but both partnership firm and pany have distinct personal status – “Firm” and “Company” respectively. Residential status may be resident [defined u/s 2(55), ITO] or non resident [defined u/s 2(42), ITO]. Under section 17, resident assessee (taxpayer) has to pay ine tax on total global ine including foreign ine, but nonresident taxpayer has to pay ine tax only on his total domestic (Bangladeshi) ine as determined u/s 18 (ine deemed to accrue or arise in Bangladesh). Under section 2(55), an individual is to be a resident if his period of stay in Bangladesh is at least 182 days in the concerned ine year, or at least 90 days in the concerned ine year, and at least 365 days in the preceding 4 ine years. A partnership firm is considered as resident, if the control and management of its affairs situated wholly or partly in Bangladesh in the concerned ine year. A pany will be a resident, if control and management of its affairs situated wholly in Bangladesh in the concerned ine year. Otherwise, a taxpayer will be treated as nonresident [u/s 2(42)]. Levels of Taxation: Question regarding whether the entity itself and/or the owner(s) of the entity is(are) taxable is explained on the basis of two concepts: passthrough entity (or flowthrough entity) and nonpassthrough entity: ? PassThrough Entity: This entity is not taxable itself. The ine of the entity will pass through the owners and is taxable after its accumulation with the owner?s other ine. Sole proprietorship is a passthrough entity. The owner of the entity is taxable for the entire ine of the business entity (whether withdrawn or not) along with his/her other ine. 11 ? NonPassThrough Entities: This entity is taxable itself. The ine of the entity may be distributed to the owners and is usually again taxable in the hands of owners after its accumulation with his/her other ine. Partnership firm and pany are nonpassthrough entities. A partnership firm is taxable for its ine in first instance as a nonpassthrough entity. The partners of the firm shall include the share of total ine of the firm in the ine year [to be puted u/s 43(3)] and but to avoid double taxation, the share of ine will be treated as taxfree ine subject to “tax rebate at average tax rate (ATR)” if the firm has already paid tax on its ine [paragraph 16, PartB, Sixth Schedule]. But where any tax payable by any partner of a firm in respect of his share of ine cannot be recovered from him, then DCT (Deputy Commissioner of Taxes) shall collect it from the firm [sec. 98]. In case of discontinued business of a firm or if the firm is dissolved, the partners are jointly and severally liable to pay due tax, if any [sec. 99]. See few other statutory issues regarding partnership firm and partners in AppendixI. A pany is taxable for its total ine always as a nonpassthrough entity. The shareholders of the pany are taxable for the ine of the entity, only if distributed to them as dividend, which is subject to a sourcetax ( 10% (u/s 54). At the time of sale/transfer of shares, the shareholder may require to pay tax on capital gain arising from the sale or transfer. Thus, shareholderlevel of tax (ts) usually includes tax on dividend distributed and tax on capital gain on sale/transfer of shares. However, capital gain on transfer of shares of a pany established under the Companies Act 1994 is subject to a reduced rate of 10% [. No. 220Ain/Aykar/2021 dated ], but the capital gain on transfer of stocks and shares of public panies listed with a stock exchange in Bangladesh is fully exempted [sec. 32(7)]. In case of a nonpassthrough entity, there is at least doublelevel taxation. First, a tax is paid by the entity and then a second tax is paid by the owners of the entity (partners of a firm or shareholders of pany). In case of firm which has duly paid its tax, double taxation is avoided by considering the share of firm?s ine as taxfree and allowing a tax rebate thereon to the partners. But in case of a pany, the pany has to pay tax on its ine at 30%, 40% or 45% and then the individual shareholders have to pay sourcetax at 10%, which will be treated as advance ine tax (AIT) and then considering the marginal tax rate of the concerned shareholders, tax rate on dividend may be up to 25% for highine taxpayers. In case of a pany investing in shares of another pany, there will be triple taxation. The pany of which shares have been purchased has to pay firstlevel tax on its ine at 30%, 40% or 45%. Then the investing pany has to pay secondlevel tax on distributed dividend at 15% and when it will distribute its ine as dividend, its individual shareholder has to pay thirdlevel tax (sourcetax and possible extra tax). TAX EVASION, TAX AVOIDANCE, AND TAX PLANNING Tax reduction strategies are often tainted with legality. Ine tax statutes have provisions for charging tax on “any ine, profits or gains, from whatever source derived” u/s 2(34)(a) and hence, according to the spirit of this provision, legality of the source may not be questioned if tax is duly paid. Suffice it to say, in the Ine Tax Ordinance, there are several sections where investment out of undisclosed ine can be legalized by paying tax at a stipulated rate not always on the invested amount and the tax rate is often very low [., specific tax rate at Taka 300 or Taka 500 or Taka 200 per square meter for investment in house property u/s 19B, % of the deed value in case of investment u/s 19BB, and 10% or