28/05/2026
The Policy Paradox
Under Bangladeshi tax law, the tax on cash dividends distributed by listed companies to institutional or individual retail investors is typically withheld at source (e.g., 10% to 15% for individuals with ETIN, and 20% for companies/institutions as a minimum tax).
If Bangladesh Bank's new circular entirely blocks banks with less than Tk 2,000 crore in paid-up capital from distributing cash dividends, the government's National Board of Revenue (NBR) will face a severe and direct drop in tax revenue collection.
To understand the scale of this loss, we can look at the recent massive dividend declarations from some of the major listed commercial banks for the financial year ending December 31, 2025 (declared in early 2026).
For example : City Bank PLC, Net Profit (2025): Tk 1,324 crore, Total Dividend Declared: 30% (15% Cash, 15% Stock), Paid-up Capital: Tk 1,212 crore, Total Cash Payout: Tk 181.8 crore (15% of paid-up capital), Estimated Tax Collected at Source (assuming a 15% weighted average rate): Tk 27.27 crore.
There are 36 banks listed on the Dhaka Stock Exchange (DSE).
If we assume a standard, healthy year where banks manage an average cash dividend payout of just 10% to 12 across the entire listed sector, the government stands to immediately lose Tk 500 crore to Tk 600 crore in direct withholding tax revenue from the banking sector alone.
The NBR relies heavily on cash dividends to collect its minimum 20% institutional tax and individual source taxes, while simultaneously penalizing companies under Section 23 of the Income Tax Act if they issue paper stock instead of cash.
By implementing this arbitrary Tk 2,000 crore threshold, Bangladesh Bank isn't just hurting capital market sentiment—it is actively cutting off a vital pipeline of revenue for the government's own national treasury.
Tax Professionals BD
