How can an Umbrella Company Help with Contracting in Bangladesh?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Bangladesh. Even better, most are experts in Bangladeshi and expat tax law, meaning they’ll also help you optimise your earnings in Bangladesh.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Bangladesh.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Bangladesh, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Bangladesh and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Bangladesh
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.
How do I calculate my taxable income in Bangladesh
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.
Tax Filing as a Contractor in Bangladesh
|When Do You Need to Lodge Your Tax Return?||30 September|
|Tax Filing Deadline||30 September|
|Can you file it online?||Yes, https://www.etaxnbr.gov.bd/|
How to File Taxes in Bangladesh as a Contractor
Step 1: Apply for an e-TIN
Complete and submit an application form, which can be found here(link is external), 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(link is external). 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(link is external).
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(link is external).
Step 5: Submit Tax Return
Once you have completed the tax forms, click ‘Submit’. Upon successful confirmation, a confirmation screen will appear.
Tax Figures in Bangladesh
|Currency||Bangladeshi Taka (BDT)|
|Tax-free Threshold in Bangladesh||BDT250,000|
|Income Tax Rates|
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).
Tax Residency in Bangladesh
When do you become a tax resident in Bangladesh
You become a tax resident in Bangladesh when:
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.
Does the 183 day rule apply in Bangladesh
Am I taxed on my global income in Bangladesh
Residents are taxed on their global income. Non-residents are taxed on their Bangladesh-source income only.
Can you set up your own Limited Company in Bangladesh?
|How long does it take to set up||19.5 days|
|How much does it cost||BDT25,130 - BDT25,150|
|Is it easy?||Starting a Business Rank: 131/190 (Source: World Bank)|
Tax Calculator in Bangladesh
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.
Using an Umbrella Company for Income Tax in Bangladesh
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.
How We Can Help You with Tax in Bangladesh
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!
A Contractor’s Guide to Work Permits in Bangladesh
Immigration is one of the primary concerns for any contractor hoping to start working in Bangladesh. Permanent employees will find it easy to get their Bangladeshi work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Bangladeshi work permit, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Bangladesh is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Bangladesh (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Bangladesh. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Bangladesh and match contractors with the right company for them. If you’ve already secured a contract in Bangladesh, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).