Foreign nationals working in Bangladesh pay income tax on what they earn there, and how much depends on one question: are they tax resident? A resident expat is taxed on the same progressive slabs as a Bangladeshi. A non-resident foreigner pays a flat 30% with no tax-free band.
Employers carry most of the paperwork. This guide covers the 2026-27 tax year (income earned 1 July 2025 to 30 June 2026) under the Finance Act 2026.
Key takeaways
- Residency depends only on days spent in Bangladesh during the income year.
- Resident expats pay 0% on the first Tk 400,000, then 10% to 30%. Non-resident foreigners pay 30% flat.
- Employers deduct tax monthly, deposit it within two weeks of month-end and file a withholding return every quarter.
- Expats file their own annual return. Filing by 31 December 2026 avoids any additional tax.
- A departing expat needs a tax clearance certificate before the work permit can be cancelled.
Tax Residency: The Rule That Decides Everything
Bangladesh decides residency purely on physical presence, regardless of residency anywhere else. A foreign employee is resident for an income year (1 July to 30 June) if they spend:
- 183 days or more in Bangladesh in that income year, or
- 90 days or more in that income year, having spent 365 days or more in Bangladesh over the previous four income years.
| Status | What is taxed | Rate |
|---|---|---|
|
Resident foreigner
|
Income from working in Bangladesh, plus foreign income received from Bangladeshi sources
|
Progressive slabs, 0% to 30%
|
|
Non-resident foreigner
|
Bangladesh-source income only, including salary for work done in Bangladesh
|
Flat 30%, no tax-free band
|
An expat on a multi-year assignment normally becomes resident in the first income year they pass 183 days. A specialist on a three-month project is usually non-resident and pays 30%.
Bangladesh has double taxation agreements with around 38 countries. Many exempt short-stay employees are paid by a foreign employer, and residents can claim credit for foreign tax paid on the same income.
Income Tax Rates for 2026-27
Resident expats are taxed on the slabs below. The Finance Act 2026 raised the tax-free threshold to Tk 400,000 and abolished the old 5% band, so tax now starts at 10%.
| Slice of taxable income (resident) | Rate |
|---|---|
|
First Tk 400,000
|
0%
|
|
Next Tk 300,000
|
10%
|
|
Next Tk 400,000
|
15%
|
|
Next Tk 500,000
|
20%
|
|
Next Tk 2,000,000
|
25%
|
|
Remaining income
|
30%
|
Four other rules shape the final bill:
- Salary exemption. One-third of employment income or Tk 500,000, whichever is lower, is exempt before the slabs apply.
- Minimum tax. Anyone above the threshold pays at least Tk 5,000.
- Investment rebate. Residents can claim the lowest of 3% of taxable income, 10% of eligible investment, or Tk 750,000.
- Non-residents. Foreign non-residents pay 30% flat, with no threshold and no investment rebate.
What Counts as Taxable Income for an Expat
Everything paid for work done in Bangladesh is taxable, in cash or in kind. That includes:
- Basic salary, allowances, festival and performance bonuses
- Housing, a company car and other benefits provided by the employer
- Overseas, hardship or relocation allowances
- Salary paid abroad by a parent company for work performed in Bangladesh
The last point catches split-payroll arrangements: pay left in a home-country account is still Bangladesh-source income and must be combined with local pay.
What Employers Must Do and File
Payroll mistakes become the employer’s liability, not the employee’s.
- Hire only with a work permit. Every foreign employee needs approval from the investment authority (formerly BIDA), BEPZA or the NGO Affairs Bureau before starting work. See our work permit guide.
- Deduct tax every month. Under section 86 of the Income Tax Act 2023, deduct at the average rate of the employee’s estimated annual tax. Recalculate when pay, benefits or residency status change. For non-residents, deduct 30%.
- Deposit within two weeks. Tax deducted from July to May must reach the treasury within two weeks of the month-end. June deductions have shorter deadlines.
- File quarterly withholding returns. Depositing the tax does not replace filing the return.
- Submit the annual statements. A statement of yearly salary and tax deducted per employee goes with the October return. Information on employees’ own tax returns goes with the April return.
- Collect proof of return (PSR). Get PSR from managerial and supervisory staff. Without it, their salary may not be deductible from the company’s taxable income.
- Issue tax certificates. Give each expat a salary and tax-deduction certificate so they can file their own return.
| Quarterly withholding return | Due date |
|---|---|
|
July to September
|
25 October
|
|
October to December
|
25 January
|
|
January to March
|
25 April
|
|
April to June
|
25 July
|
What non-compliance costs. Late or short deposits carry simple interest of 2% a month for up to 24 months, and non-compliant salary costs can be disallowed. Missing a quarterly return can cost the higher of 10% of last assessed tax or Tk 5,000. Employing a foreigner without permission has long carried additional tax of 50% of the employee’s tax or Tk 500,000, whichever is higher. The company can also lose tax holidays, and responsible officers face up to three years in prison.
What Expat Employees Must File
Payroll withholding does not settle an expat’s tax. It is a prepayment. The employee still files a return and claims credit for the tax already deducted.
- TIN. Register for a Taxpayer Identification Number when employment starts.
- Annual return. File form IT-11GA with the employer’s salary and tax-deduction certificates, then pay any balance. Foreign nationals working in Bangladesh may file on paper; most other individuals must file online.
- Assets statement. Foreigners report only assets located in Bangladesh.
- Non-residents. The Finance Act 2026 removed the filing duty for non-residents with no permanent establishment in Bangladesh. Most departing assignees still file, because a return is needed for tax clearance.
The Finance Act 2026 replaced the fixed 30 November Tax Day with year-round filing. The cost now depends on when you file:
| When the 2026-27 return is filed | Effect |
|---|---|
|
1 July to 30 September 2026 |
Rebate of 5% of tax payable, up to Tk 25,000
|
|
1 October to 31 December 2026
|
No rebate, no additional tax
|
|
1 January to 31 March 2027
|
Additional 2% of tax, at least Tk 3,000
|
|
1 April to 30 June 2027
|
Additional 5% of tax, at least Tk 5,000
|
Leaving Bangladesh. A foreigner leaving permanently must settle tax on income up to the departure date and obtain an income tax clearance certificate. The employer needs it to cancel the work permit, and immigration officers can ask for it at the airport. Start the process well before the last working day.
Worked Example: One Salary, Two Outcomes
An expat engineer earns a gross Tk 3,600,000 in the year to June 2026. The salary exemption is Tk 500,000, leaving Tk 3,100,000 taxable. Figures are illustrative.
| Slice | Resident tax (Tk) |
|---|---|
|
First 400,000 at 0%
|
0
|
|
Next 300,000 at 10%
|
30,000
|
|
Next 400,000 at 15%
|
60,000
|
|
Next 500,000 at 20%
|
100,000
|
|
Remaining 1,500,000 at 25%
|
375,000
|
|
Total before rebate
|
565,000
|
As a resident, the engineer pays about Tk 565,000, an effective 15.7% of gross pay. Taxed at the non-resident flat 30% on the same Tk 3,100,000, the bill would be Tk 930,000. Assignment timing around the 183-day test matters.
How AccouSource Helps
AccouSource runs expat tax compliance for international companies operating in Bangladesh:
- Payroll and withholding: monthly tax calculation, deposits and quarterly withholding returns
- Residency planning: tracking days and applying treaty relief where it is available
- Expat returns: TIN registration, annual returns and assets statements
- Exit support: tax clearance certificates and work permit cancellation
[Contact our team] to review how your foreign employees are taxed before the 31 December filing window closes.
