Bangladesh

Registrations and Establishing an Entity

To operate legally, companies must register with the Registrar of Joint Stock Companies and Firms (RJSC). This process includes obtaining name clearance, filing Memorandum and Articles of Association, and submitting various forms such as Forms I, VI, IX, X, and XII. Non-resident subscribers must also obtain an encashment certificate.

Additional steps include:

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

While there’s no strict deadline for authority registration of expatriates, they must be included in the annual return filings.

Banking

A Bangladeshi in-country bank account is mandatory for making salary payments and for compliance with tax and VAT payments. Banks are typically open Sunday to Thursday from 10:00 to 17:00, in line with the country’s Sunday–Thursday working week.

Working Week

The standard working week runs from Sunday to Thursday, reflecting the country’s Islamic calendar. Offices typically operate between 09:00 and 17:00. Friday is a universal weekly holiday, and some industries offer 1.5 days off per week.

Employment Law

Holiday Accrual

Employees are entitled to 11 festival holidays, 10 casual leave days, and 14 days of paid sick leave per year (with a medical certificate). Annual leave accrues at a rate of one day for every 18 days worked (equating to approximately 14–18 days annually).

Maternity Leave

Female employees are entitled to 16 weeks (112 days) of paid maternity leave, split equally before and after childbirth. This benefit is only available if the employee has fewer than two living children and has completed at least six months of continuous service.

Paternity Leave

There is no statutory provision for paternity leave in Bangladesh. Any entitlement is determined by company policy.

Sick Leave

Employees are eligible for 14 days of sick leave per year. A medical certificate from a registered practitioner is required for absences exceeding two days. Employers bear the full cost of this leave.

National Service

Bangladesh does not operate a compulsory military or civilian national service system.

Tax & Social Security

The tax year in Bangladesh runs from 1 July to 30 June. Employers are responsible for withholding tax at source and filing returns quarterly and annually with the NBR.

Income Tax

Personal income is taxed progressively:

• 0%: up to BDT 350,000 (BDT 400,000 for women/seniors, higher for disabled persons)
• 5%–30%: for income above the threshold
• Minimum tax:
  
  • BDT 5,000 (Dhaka/Chattogram city corporations)
  • BDT 4,000 (other cities)
  • BDT 3,000 (non-urban areas)

Recent changes introduced seven tax slabs, with a top marginal rate of 30% for income exceeding BDT 3.85 million.

Social Security

Bangladesh does not operate a contributory social security system for private sector employees. Instead, social protections such as pensions and injury compensation are state-funded. There are no monthly payroll-related social security submissions required from employers.

Payroll

Employers must pay salaries through local bank accounts and ensure timely tax withholding and returns. Payroll runs typically take 3–4 days to process. Delays in tax payment incur a 20% interest penalty.

Reports

Employers must maintain payroll records for at least 3 years. Quarterly reports of tax withheld (with employee names and TINs) must be submitted to the Deputy Commissioner of Taxes within 15 days of quarter-end. These reports must be signed by the employer’s authorised attorney.

Payslip Example

Payslips must reflect gross salary, tax withheld, and any benefits or bonuses. While there is no fixed legal format, best practice is to provide monthly payslips for transparency and compliance.

Reporting

Annual returns for individual tax filings are due by 30 November. Employers must file employee salary declarations and ensure inclusion in company annual tax returns.

New Employees

All new employees must be documented with full personal details, including:

• TIN
• National ID (for locals)
• Three photographs
• Passport and visa (for expatriates)

Employers are also expected to obtain Board of Investment (BOI) registration for hiring expatriates.

Leavers

Employees must receive a formal clearance and final salary upon termination. Redundancy or resignation must be reported in year-end filings, and any compensation due must be paid per legal entitlements or contractual terms.

Severance varies based on years of service:

• 14 days' wages per year (5–10 years of service)
• 30 days' wages per year (10+ years), or gratuity, whichever is higher

Termination notice periods:

• 120 days for monthly-rated workers (employer-initiated)
• 60 days for other cases or voluntary resignation

Employee Benefits

Common employer-provided benefits in Bangladesh include:

• Provident Fund contributions
• Gratuity and end-of-service benefits
• Annual leave encashment
• Medical insurance
• Subsidised meals and transport
• Pick-and-drop services

Gratuity schemes and Provident Funds are often customised by company policy and sector-specific agreements.

Expenses

Company policies vary on whether travel, housing, or vehicle expenses are processed through payroll. Such items may be treated as allowances and taxed accordingly, unless documented as employer reimbursements.

Foreign nationals intending to work in Bangladesh must:

1. Apply to the Bangladesh Investment Development Authority (BIDA) for an e-visa recommendation
2. Obtain a three-month e-visa from the local Bangladeshi embassy
3. Convert the e-visa into a work permit upon arrival

Key documents required:

• Employment contract
• Proof of qualifications and experience
• Passport and passport-sized photographs
• Medical and police certificates
• BOI authorisation and local job advertisements

Work permits are generally issued for up to five years, subject to annual renewals. Business visas are also available for short-term engagements and meetings.

• Friday is the official weekly holiday, with a Sunday–Thursday working week.
• Social security systems are state-funded; employers are not required to contribute.
• Garment sector dominates the economy, and labour laws are tailored to protect RMG workers.
• Industry-specific minimum wages are set by the Minimum Wage Board and vary significantly.
• The national minimum wage in 2025 is BDT 12,500/month, increased from BDT 8,000 previously.
  
  

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.