Bangladesh’s finance minister Amir Khosru Mahmud Chowdhury presented a new amendment to the Income Tax Act in parliament on June 11, 2026. The proposal states that if a company fails to pay loan interest within three years, the unpaid amount will be treated as business income and taxed accordingly. The measure aims to prevent companies from repeatedly claiming unpaid interest as expenses to reduce taxable profits.

According to the amendment, if the unpaid interest is later settled after the three-year period, it will then be considered an allowable expense for that year. The change aligns the tax law with international accounting standards under the International Financial Reporting System (IFRS), which follows the accrual basis of accounting. Previously, the National Board of Revenue (NBR) applied a cost basis, recognizing expenses only when payments were made.

Officials explained that the amendment resolves inconsistencies between accounting and tax reporting practices, ensuring that companies cannot indefinitely defer tax liabilities by delaying interest payments.