One of the most consistently challenging aspects of contracting in Bangladesh is complying with the country’s tax system. As well as paying tax in Bangladesh, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
If you’re working in Bangladesh under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Bangladesh for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Bangladesh, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Bangladesh through PAYE is left with the prospect doing everything themselves.
Do you know much about Bangladeshi Tax Law? Does Bangladesh have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Bangladesh can range from 0 to 30 percent, and you need to be sure you are placed in the correct tax brackets.
If you are a contractor and want a calculation on your tax and net retention in Bangladesh, we can supply it to you free of charge.
Contractors in Bangladesh are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Bangladeshi umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Bangladeshi taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Bangladeshi tax office or tax department directly including processing your tax refund if you are eligible.
We work with numerous umbrella companies in Bangladesh, many of whom are experts in tax and immigration laws. If you have any questions about tax in Bangladesh, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Bangladeshi work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Bangladesh but without the overhead of directly dealing with the Bangladeshi tax authorities. Get in touch with us today for some reliable advice on tax in Bangladesh!
Step 1: Apply for an e-TIN
Complete and submit an application form, which can be found here, to your local tax office, along with your 12-digit TIN and your National/Corporate ID Card.
Upon successful registration, the tax office will provide you with an Online Account certificate containing your username and password.
Step 2: Log in to the Online Filing System
Access the online tax filing system here. You will be required to change your password when logging in for the first time.
Step 3: Enable/Download Adobe Reader
To use the online filing system, you need to enable Abode Reader. Ensure this is enabled on your web browser. For Firebox, go to ‘Tools’ > ‘Options’ > ‘Applications’ > ‘Use Adobe Reader (default)’. For Internet Explorer, go to ‘Tools’ > ‘Compatibility View settings’ > ‘Add’.
Alternatively, download Adobe Reader here.
Step 4: File Taxes
Once you have logged in, a list containing all your tax filing obligations is displayed under the ‘Task Overview’ tab. Click ‘Filing’ under ‘Task’ OR select the ‘Filing’ tab and click ‘File a New Tax Return’.
For individual tax returns, select ‘Other than Company Form’ next to ‘Tax Type, and ‘IT-11GA (Tax return for other than Company) next to ‘Tax Form’.
Click ‘Next’, and select the particular form for which you want to input data. You will be required to fill out your personal details (name, National ID Number, TIN, names of parents/spouses etc.).
Some forms may not apply to you. In this case, you must still open the form and click ‘Apply and Close’. A comprehensive guide detailing the information required by each form, and a description of each field, can be found here.
Step 5: Submit Tax Return
Once you have completed the tax forms, click ‘Submit’. Upon successful confirmation, a confirmation screen will appear.
Tax-Free Threshold for Women and Senior Taxpayers: For women and individuals aged 65 or over, the tax-free threshold is BDT300,000.
Rates for Non-Residents: The tax rates above apply to Bangladeshi residents and Bangladeshi non-residents. Non-residents other than Bangladeshi non-residents are subject to a flat tax rate of 30% on total taxable income.
Tax Refunds: A cash tax refund is generally not available. Instead, any excess tax payment is deducted from the following year’s liability.
Deductions: Deductions from taxable income include rent (the higher of 25% of the taxpayer’s salary or BDT25,000 per month), conveyance (maximum BDT30,000), car purchase (the higher of 5% of basic salary or BDT60,000), and medical allowance (the lower of 10% of salary or BDT120,000).
You become a tax resident in Bangladesh when:
- You stay in Bangladesh for a total of at least 183 days during the income tax year; or
- You stay in Bangladesh for a total of at least 90 days during the income tax year, AND you have previously been in Bangladesh for a total of at least 365 days during the 4 years preceding that year.
Residents are taxed on their global income. Non-residents are taxed on their Bangladesh-source income only.