Plan contractor hiring in Bangladesh

Bangladesh contractors in this scenario are engaged in their own name as individual service businesses, invoice the offshore customer, and receive documented service-export proceeds through a Bangladesh authorized dealer. The resident contractor owns the business-income return, TIN, and VAT position. The foreign customer has a separate income-tax checkpoint because the withholding definition expressly includes a foreign enterprise established outside Bangladesh, even when it has no local entity or permanent establishment. The receiving institution then deducts the current 5% under section 124 when it credits qualifying foreign-remitted service income, subject to the section's exclusions. Set the gross fee, deduction treatment, evidence, and certificate delivery before the first invoice.

Sources: Laws of Bangladesh, current Income Tax Act 2023, National Board of Revenue, Income Tax Guide 2026-2027

If the line is crossed

If the facts make the individual a শ্রমিক and the Act applies to the relevant establishment, contractor-only treatment gives way to the applicable employment protections. The foreign customer's lack of a Bangladesh entity does not answer that worker-status question. It does make the enforcement and employer-registration path fact-sensitive, because the Act applies across Bangladesh subject to listed establishment and worker exclusions and does not give this no-presence scenario a simple published onboarding procedure. Stop contractor payments when the working model becomes employee-like, preserve the actual supervision and role evidence, and obtain Bangladesh labour advice on employment terms, employer obligations, arrears, and remedies before continuing the engagement.

Sources: Laws of Bangladesh, current Labour Act 2006, Laws of Bangladesh, Labour Amendment Act 2026

উৎসে কর কর্তন সনদপত্র

Tax deduction certificate

The উৎসে কর কর্তন সনদপত্র is the contractor's evidence for income tax actually withheld from a service payment. Each person that deducts must furnish a certificate showing the contractor's name and TIN, the deducted amount, the legal section, and the government-deposit particulars. Request one from the foreign customer if it applies section 90 and another from the receiving institution when it applies section 124. Reconcile both certificates to the invoice and amount received before closing the period. A promise to deduct, a net remittance, or a customer-generated memo does not replace the statutory certificate.

Issued by: Each person that deducts or collects income tax, delivered to the contractor

Timing: After the deduction and government deposit, in time for the contractor to reconcile the income-tax record

Sources: Laws of Bangladesh, current Income Tax Act 2023

Bangladesh zero-rates a service export that meets section 24's conditions. For this B2B engagement, confirm that the nonresident recipient remains outside Bangladesh during supply, the work is not directly connected with Bangladesh land or physically performed on goods in Bangladesh, and it is not a global-roaming service supplied to a person temporarily outside Bangladesh. A foreign billing address by itself is insufficient. Section 49 VAT withholding applies to supplies that are neither exempt nor zero-rated, so a qualifying zero-rated export does not create VAT withholding for this foreign customer. Income-tax withholding under sections 90 and 124 remains a separate analysis.

Sources: Laws of Bangladesh, current VAT and Supplementary Duty Act 2012

What an invoice has to show

• Supplier name, address, and বিআইএন, plus purchaser details where applicable

  A registered supplier's VAT-6.3 invoice identifies the supplier by name, address, and BIN. For a supply above BDT 25,000, it also includes the purchaser's name, address, and BIN where applicable. The offshore customer in this scenario may have no Bangladesh BIN, so the contractor should use the customer's accurate foreign legal name and address and leave the local identifier to the applicable treatment. Never insert a borrowed or invented BIN to force the form through an approval check.

  Sources: National Board of Revenue, Authentic English Text of VAT Rules 2016, National Board of Revenue, SRO No. 125-Law/2026/330-VAT

• Issue date and time, supply date, and fiscal-year serial number

  A VAT-6.3 invoice records the actual issue date and time, the supply date, and a serial number that runs by fiscal year. Check all three before accepting the document. Record the issue date and time shown by the supplier separately from the customer's receipt date, and match the fiscal-year serial to the invoice kept in the tax records. Keep the accepted copy with the related deduction certificate and contract milestone for reconciliation. If a required date, time, or serial field is absent or internally inconsistent, return the invoice for correction before payment.

  Sources: National Board of Revenue, Authentic English Text of VAT Rules 2016

• Value before VAT, VAT rate, VAT payable, and total

  A VAT-6.3 invoice states the supply value before VAT, the applicable VAT rate, the VAT payable, and the combined total. When the service qualifies as an export under section 24, show the zero-rated treatment and a zero VAT amount while preserving the facts that support it. If the recipient-location requirement fails or a Bangladesh land, Bangladesh goods, or global-roaming exclusion applies, reassess the VAT result before issuing the invoice. The currency choice does not turn a domestic or otherwise ineligible service into a zero-rated export.

  Sources: National Board of Revenue, Authentic English Text of VAT Rules 2016, Laws of Bangladesh, current VAT and Supplementary Duty Act 2012

The contractor should bill against the commercial milestone and due date stated in the service contract, then be ready to respond when the receiving authorized dealer asks for transaction information or documents needed to process the inward receipt. The foreign customer should keep its remitter identity, amount, and purpose consistent with the agreed transaction and the remittance message. Before payment, resolve the customer's section 90 deduction and certificate process. The receiving institution or other person responsible for payment or account credit deducts the current section 124 tax on the amount credited, subject to statutory exclusions; the contractor reconciles the receipt and certificate. Keep those income-tax steps distinct from the supplier's VAT zero-rating. The current Bangladesh Bank export circular is valid for one year from 30 July 2026, so recheck its instructions before 30 July 2027.

Sources: Bangladesh Bank, FEPD-1 Circular No. 26 of 2026, Laws of Bangladesh, current Income Tax Act 2023

When invoices are settled

For a service outsourced through the internet, the current Bangladesh Bank circular says payment is normally due on delivery, so define the delivery and acceptance event in the agreement. For any other service form, set an express customer due date and acceptance point in the contract. The exporter generally has four months to repatriate service-export proceeds unless Bangladesh Bank gives a general or special authorization. After complete transaction details reach the receiving authorized dealer, credit is due the same business day during transaction hours or the next business day after hours. Cases requiring pre-credit review may take up to three business days. These crediting periods begin after receipt and do not extend the customer's contractual due date. Recheck the circular before 30 July 2027 because it is valid for one year from 30 July 2026.

Sources: Bangladesh Bank, FEPD-1 Circular No. 26 of 2026

Local currency rules

Bangladesh Bank Part L puts the inward-receipt workflow on the authorized dealer. The dealer must provide secure digital interfaces for required information and documents, capture, validate, and retain customer-declared or authenticated-message information, and collect remittance purpose and supporting information through existing digital channels until those interfaces are in place. The resident contractor should keep invoice, remitter, amount, purpose, and supporting records ready for any dealer request, while the foreign customer should keep the remittance message consistent with the transaction. Form-C and Form-C (ICT) are discontinued. Incomplete or inconsistent purpose or underlying-transaction information can move the receipt into pre-credit review; the dealer remains responsible for Bangladesh processing. Recheck the circular before 30 July 2027 because it is valid for one year from 30 July 2026.

Sources: Bangladesh Bank, FEPD-1 Circular No. 26 of 2026

Assuming an offshore customer cannot have a Bangladesh withholding duty

A foreign enterprise established outside Bangladesh is expressly a specified person for the service-payment rule, so the absence of a local entity or permanent establishment does not close the section 90 analysis. Determine the exact service row and contractor category under the Withholding Tax Rules 2026 before the first payment, then document how the foreign customer will deduct, deposit, report, and deliver the certificate. Keep that process separate from the receiving institution's current 5% section 124 deduction. Do not quote one generic professional-services rate across every consultancy, technical, advisory, or other service engagement.

Sources: Laws of Bangladesh, current Income Tax Act 2023, National Board of Revenue, Withholding Tax Rules 2026

Claiming zero-rated VAT from the customer's address alone

A foreign address is only one part of the service-export test. Confirm where the nonresident recipient is during supply, whether the work connects directly to Bangladesh land, whether it is physically performed on goods in Bangladesh, and whether it is a global-roaming service supplied to a person temporarily outside Bangladesh. Preserve those facts with the agreement and delivery record. If the conditions are met, the registered contractor shows zero-rated treatment and section 49 VAT withholding does not apply. The income-tax deductions under sections 90 and 124 continue on their own terms.

Sources: Laws of Bangladesh, current VAT and Supplementary Duty Act 2012

Sending an inward receipt with vague or mismatched service details

A vague purpose or inconsistent remitter, amount, or underlying-transaction information can trigger pre-credit verification. Keep the remitter identity, amount, and purpose accurate across the agreed transaction and the information given to the receiving authorized dealer. Supply any requested supporting document through the dealer's current digital process. Cases involving missing information, a new customer, regulatory checks, or risk flags can take up to three business days after the dealer identifies them. That period governs the dealer's review after receipt; it does not extend the customer's contractual due date. Recheck this process before 30 July 2027 because the governing circular is valid for one year from 30 July 2026.

Sources: Bangladesh Bank, FEPD-1 Circular No. 26 of 2026