Our guide to Payroll in Bangladesh

Doing Business in Bangladesh

Investing in Bangladesh

Bangladesh is a winning combination with its competitive market, business-friendly environment and cost structure that can give businesses the best returns. Bangladesh has proved to be an attractive investment location with a population of more than 173 million and consistent economic growth leading to strong and growing domestic demand.

Basic Facts about Bangladesh

Full Name: The People’s Republic of Bangladesh

Population: 173 million (World Bank, 2023)

Capital: Dhaka

Official Language: Bengali

Major Religion: Islam

Monetary Unit: Bangladeshi Taka (BDT)

International Time: GMT +6

Main Exports: Ready-made garments, jute, leather goods, shrimp and tea

GNI Per Capita: US $2,860 (World Bank, 2023)

Internet Domain: .bd

International Dialling Code: +880

Date Format: Dates are usually written in the day, month and year sequence. For example: 1 July 2026 or 1/7/26.

Common Phrases

Hello: হ্যালো (Hyālō)
Good Morning: সুপ্রভাত (Suprabhāt)
Good Evening: শুভ সন্ধ্যা (Shubho shondhya)
Do you speak English?: আপনি কি ইংরেজি বলতে পারেন? (Āpni ki inreji bolte pāren?)
Goodbye: বিদায় (Biday)
Thank you: ধন্যবাদ (Dhonnobad)
See you later: পরে দেখা হবে (Pore dekha hobe)

2026 Holiday Dates

Registrations and Establishing an Entity

It is important to check that the proposed company name is available for registration; the entrepreneur then applies for name clearance through the Registrar of Joint Stock Companies and Firms (RJSC) website. A printout of the Name Clearance Certificate must be submitted to the RJSC, along with the other required documents for incorporation.

To register a company, the following documents must be submitted to the registrar:

• Name Clearance Certificate
• Memorandum and Articles of Association
• Forms I (Declaration on the registration of the company);
• Form VI (Notice of the registered office);
• Form IX (Consent to act as directors);
• Form X (The list of persons consenting to act as directors);
• Form XII (Particulars of the directors, managers, and managing agents)
• Proof of payment (i.e. receipt from the designated bank) for treasury stamps
• Encashment certificate (for non-resident subscribers)
• Tax identification number (for resident subscribers).

The other important steps involved in registering a company are:

• Making a company seal
• Obtaining a Tax Identification Number (TIN) from the National Board of Revenue (NBR)
• Registering for VAT
• Obtaining a Trade License

Banking

It is mandatory to make payments to both employees and the authorities from an in-country bank account. Generally, banks are open Sunday to Thursday from 10:00 to 17:00.

Employment Law

The Labour Law of Bangladesh extends its jurisdiction to both local and foreign employees, with its provisions being applicable irrespective of the choice of law stated in the employment contract. Employment relations falling outside the scope of the law are subject to individual contractual terms and conditions. The comprehensive coverage of the Bangladesh Labour Law encompasses various facets of labour and workforce management, addressing matters such as wages, termination, grievances, working conditions, female workers, recruitment, unionization, and child labour.

A letter of appointment is a mandatory requirement under the Labour Act of 2006. In the absence of a formal written contract, the letter of appointment is regarded as a contract, incorporating the essential terms stipulated by the Labour Act of 2006. The terms of the contract (written or verbal), as long as they are not less favourable than the Labour Act 2006, are considered valid and binding.

Working hours

Workers in the public or private sector remain at their job for 8 hours daily (including half an hour for meal or rest) with Friday as a weekly holiday marking 48 working hours per week. Work in excess of these hours is paid as overtime. The rate of overtime is two hours pay for one hour of work.

Leaves and holidays

Bangladeshi employees are entitled to leaves and holidays, including casual leaves, sick leaves, annual leaves with wages, festival leaves, maternity leaves, etc. Each leave category is allotted a specific number of days per year. For instance, there are 10 casual Leaves, 14 days of sick leave with a medical certificate, and industry-specific annual leaves, which can be 14-18 days.

National Service

Bangladesh does not have a system of mandatory national service or compulsory military service for its citizens.

Termination:

Termination by an employee:

• A permanent worker may resign his service by giving the employer 60 days’ notice in writing.
• Where a worker intends to resign his service without any notice, he may do so by paying the employer an amount equal to the wages for the period of notice, in lieu of notice.
• Where a permanent worker can resign, the employer shall pay compensation:

(a) at the rate of 14 days’ wages for every completed year of service, if they have completed at least 5, but less than 10 years of continuous service under the employer.

(b) at the rate of 30 days’ wages for every completed year of service if they have completed 10 or more years of continuous service under the employer; or gratuity, if payable, whichever is higher, and this compensation shall be in addition to any other benefit payable to such worker.

Termination by an Employer:

The employment of a permanent worker may be terminated by an employer, by giving him a notice in writing, of

• 120 days, if he is a monthly rated worker;
• 60 days, in the case of other workers.

Where the employment of a permanent worker is terminated, he shall be paid by the employer compensation at the rate of 30 days' wages for his every completed year of service or gratuity, if payable, whichever is higher, and this compensation shall be in addition to any other benefit which is payable to such worker under the labour Act.

Discretionary termination:

To terminate permanent employment, the:

• Employer must give 120 days' notice or payment.

• Employee must give 60 days' notice.

National Minimum Wage in Bangladesh 2026

In 2026, the national minimum wage in Bangladesh is set at 12,500 Bangladeshi taka (BDT) per month. This wage rate was established following a decision by the Bangladesh Minimum Wage Board in 2024 and came into effect after a significant increase from the previous minimum wage of 8,000 BDT per month.

Tax & Social Security

The tax year runs from 1 July to 30 June. Employers are required to withhold income tax when making payments to employees. Employers are also required to file an annual return showing pay and tax deducted for each employee in the tax year.

Income Tax

Income tax is imposed on residents based on progressive tax rates, which range from 0% to 30% depending on how much the employee earns. Non-residents (excluding Bangladeshi non-residents) are taxed at the flat rate of 30%.

‘Resident’, in respect of any income year, refers to:

An individual who has been in Bangladesh:

• For a period of, or for periods amounting in all to, 183 days or more in that year, or
• For a period of, or periods amounting in all to, 90 days or more in that year having previously been in Bangladesh for a period of, or periods amounting in all to, 365 days or more during four years preceding that year.

‘Non-residents’ are taxed only on income received, accrued, or deemed to accrue or be received in Bangladesh. Consequently, their income accruing outside Bangladesh is not taxable in Bangladesh.

Tax payers need the Tax Identification Number (TIN) as well as some endorsed documents (the description of salary, security money, housing property, business, partnership basis income, profit on capital, income tax pay order etc.) to submit the tax return form.

Every taxpayer in Bangladesh must file an annual tax return by 30 November following the tax year ended 30 June. It is possible to obtain an extension but have to pay fine.

Tax is not payable by tax residents on income below BDT 350,000 (for men). The following tax rates are applicable to resident individuals, Hindu undivided families, partnership firms, and Bangladeshi non-residents:

The basic exemption for women and individuals over 65 years of age is BDT 425,000. The basic exemption for individuals with disabilities and freedom fighters are BDT 500,000 and BDT 525,000, respectively.

The minimum tax payable by an assesses is as follows:

Social Security

In Bangladesh, social security encompasses old age pensions, disability pensions, survivor allowances, cash sickness and maternity benefits, medical benefits, death benefits, work injury and death compensation, and disability benefits

Employers, employees, and self-employed individuals are not required to contribute; the government covers these expenses.

Reporting

There are no monthly contributions to be reported to the local authority.

The reports detailing names, Tax Identification Numbers & amount deducted on account of tax are submitted to the relevant Deputy Commissioner of Taxes by the payroll provider on behalf of the client within 15 days after the close of each quarter. These reports must be signed by the attorney of the client.

Payroll

It is mandatory to make payments to employees and authorities from an in-country bank account. The tax authority is required to make tax filings. To implement the payroll information such as any personal details, gross salary and benefits, the employee is needed. It takes three to four days to process payroll and registration. Any late tax payments usually carry a penalty of an additional 20% interest.

Reports

By law, payroll reports must be kept for at least three years.

New Starts

New starts must be registered with the Board of Investment; this is for expatriates only. There is no deadline for the registration with the authorities but they must be included in the annual returns.

The details required for setting up a new employee include; a Tax Identification Number (TIN), personal details, a copy of a national ID photo card, and three photographs.

Currently, the individual taxpayer is legally responsible for ensuring that they've registered with the Tax Office and comply with the regulations and payments of the taxes due.

Leavers

Any employee who leaves the business must receive clearance from their employer. All year-end returns must be submitted to the tax authority.

Employee Benefits

Employee benefits differ from company to company, but in Bangladesh, some common offerings include Provident Fund, Gratuity Fund, Medical Insurance, Annual Leave Encashment, Leave Fare Assistance (LFA), Maternity Benefits, Pick-and-Drop Services, Subsidized Lunch Facilities, and Compensation for Disability, Death, or Retirement.

Expenses

Travel expenses and income tax are common, however, depending on company policy and labour rules, they may be excluded from the payroll and treated separately.

Visas & Work Permits

Applications for a Bangladesh visa must be submitted to the High Commission using the appropriate forms along with two recent passport photographs and the original passport.

To obtain a work permit, an application is filed with the BIDA for an e-visa recommendation. On receipt of the recommendation, the Bangladesh Embassy provides the employee with an e-visa that is valid for three months. On arrival in Bangladesh, the employee must apply to the BIDA for the work permit. The applications are filed by the employer and the application stage takes about two weeks.

The following documents must be filed:

• Copy of the employer's incorporation certificate with the MoA and AoA/permission letter.
• Board resolution for the employment, mentioning salary and benefits.
• Passport size photographs and passport copy.
• Service contract/agreement or appointment letter/transfer order.
• Certificates of all academic qualifications and professional experience.
• Copy of advertisement made for local recruitment before the appointment of the expatriate.
• Specific activities of the company and statement of manpower, showing a list of local and expatriate personnel employed with designation, salary break-up, nationality and date of first appointment.

An employment visa will be granted for a period of no longer than five years.

To obtain a business visa the following documents are required:

• A letter from the concerned business/organization in the UK endorsing the eligibility of the applicant
• A letter of invitation from a Bangladeshi organization mentioning the name of the applicant
• A passport number should also be provided with the visa application

A business visa will be granted for a maximum period of six months.

Key Changes in Bangladesh for 2026

Tax-Free Income Thresholds:

No changes were made to the tax-free income thresholds.

Regular taxpayers continue to enjoy a tax-free income limit of Tk 375,000. Women, senior citizens (65+), and third-gender taxpayers retain a threshold of Tk 500,000, while disabled individuals and parents of disabled children have an increased threshold of Tk 50,000 per dependent child. “July Warriors” (2024 July Uprising) and war-wounded freedom fighters: Tk 525,000.

Adjusted Tax Slabs:

This period basically used the old seven-slab system, unchanged by major overhaul — the seven slabs ranged from 0% to 30% in steps of 5% and 10%.

Assessment Years 2026–27 & 2027–28 (New regime)

Under the revised structure (six slabs with higher brackets):

• Income up to tax-free limit: 0%
• Next Tk 300,000: 10%
• Next Tk 400,000: 15%
• Next Tk 500,000: 20%
• Next Tk 2,000,000: 25%
• Remaining income over that: 30%

Wealth Surcharge:

• No surcharge for net wealth up to Tk 40 million (i.e., those assets are surcharge-free). Above Tk 40 million, a 10% surcharge applies on tax payable. This structure continues the long-standing wealth surcharge rules implemented in past budgets. Note: Some analyses mention higher brackets (such as 35% above larger asset amounts), but the core surcharge of 10% over Tk 40 million remains unchanged in the current tax ordinance.

Sectoral Adjustments:

• Exemptions from excise duties on offshore bank deposits were introduced. However, service charges on items like mobile calls and internet services are expected to rise due to increased supplementary duties.
• These changes are part of a broader effort to increase government revenue while maintaining relief for lower-income groups.

Further Information

For more information, or assistance with Bangladesh Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.