Bangladesh

General Information:

Full Name: The People’s Republic of Bangladesh                

Population: 171.17 million (World Bank, 2022)

Capital: Dhaka

Official Language: Bengali

Major Religion: Islam

Monetary Unit: Bangladeshi Taka (BDT)

GNI Per Capita: US $2,820 (World Bank, 2022)

International Time: GMT +6

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

Internet Domain: .bd

International Dialling Code: +880

Date Format: Dates are usually written in the day, month and year sequence. For example: 1 July 2024 or 1/7/24.

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 171.17 million and consistent economic growth leading to strong and growing domestic demand.

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.

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 print out 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:

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

The other important steps involved in registering a company are:

1. Making a company seal
2. Obtaining a Tax Identification Number (TIN) from the National Board of Revenue (NBR)
3. Registering for VAT
4. Obtaining a Trade License

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/organisation in the UK endorsing the eligibility of the applicant
• A letter of invitation from a Bangladeshi organisation 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.

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 25% 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:

1. For a period of, or for periods amounting in all to, 183 days or more in that year, or
2. 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 end 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 400,000. The basic exemption for individuals with disabilities and freedom fighters are BDT 475,000 and BDT 500,000, respectively.

The minimum tax payable by an assessee is as follows:

Although Bangladesh has a social security system that supports pensioners and the disabled, employers and employees are not required to make any contributions to it.

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.

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.

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

Discretionary termination

To terminate permanent employment, the:

• Employer must give 120 days' notice or payment.
• Employee must give 60 days' notice.

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.

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.

Holiday Accrual 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.

Discretionary Termination

To terminate permanent employment, the:

• Employer must give 120 days' notice or payment.
• Employee must give 60 days' notice.

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.

Bangladesh observes a Friday weekend; therefore, the working week is Sunday to Thursday. Business hours are 09:00 to 17:00 for all private and government offices.

There are multiple statutory holiday schedules within Bangladesh. Below are the statutory national holidays in Bangladesh for 2024.

Employee benefits will vary depending on the company.

Expenses

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

The key legislative changes in employment law, income tax, social security, and employee benefits in Bangladesh for 2024:

Employment Law Changes

• Maternity Leave: The Bangladesh Labour (Amendment) Bill, 2023, increased maternity leave to 120 days from 112 days​.
• Trade Union Formation: Conditions for forming a trade union were eased. In companies with over 3,000 workers, 15% of worker signatures are required, and in companies with fewer than 3,000 workers, 20% signatures are needed​.
• Labour Appeal Tribunal: Decisions of the Labour Appeal Tribunal can be challenged in the Appellate Division, not in the High Court Division​.

Bangladesh Labour Rules 2015 Amendments:

• Protection of Women at Workplace: Introduction of miscarriage leave and mandatory safety requirements in factories.
• Yearly Increment in Wages: Mandatory yearly increment of wages, not less than 5% of the basic wages​.
• Basic Wages: Basic wages cannot be less than 50% of total wages where a separate minimum wage is not fixed​.
• Equal Pay for Outsourced Workers: Wages of a worker supplied by a contracting agency cannot be less than those of a permanent worker of a similar rank​.
• Classification of Workers: Any work continuing for more than 180 days in an establishment will be considered permanent work​.
• Disciplinary Inquiry Proceedings: Timeline for concluding disciplinary inquiry proceedings within 60 days from the issuance of the show-cause notice​.

Additional Amendments

• Various changes to trade unions, rights of employees under third-party contractors, classification of permanent work, incorporation of digital labor registrar, timeline of misconduct investigation procedure, and representation of an accused employee​.
• Behavior with Women in the Workplace: Introduction of specific rules, including the definition of sexual harassment​.

In 2024, 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 December 2023 and came into effect after a significant increase from the previous minimum wage of 8,000 BDT per month.