Taxation on Foreign-Sourced Income

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Bangladesh adopts a regional basis of taxation. Bangladesh Taxation on Foreign-Sourced Income varies. Taxes are levied on income received or collected from Bangladesh, as well as on income from foreign sources received in Bangladesh.
With the trend of globalization, it is not surprising that the income of many tax-resident companies in Bangladesh comes from abroad. Foreign income received from abroad will be taxable in Bangladesh when it is sent and received in Bangladesh, which may result in double taxation – once abroad, and the second time when foreign income is sent to Bangladesh.
Determining the area of ​​the source of income can be complex and controversial. There is no universal rule that can be applied in every situation to determine whether it is Bangladeshi-source or foreign-source. It depends on the nature of the profit and the transaction that gives rise to such profit. As a guideline, the following points can be used to determine the source of income:
1. Identify the activities that made the relevant profit and confirm where those operations took place
2. If there is no business presence abroad and the main place of business is located in Bangladesh, then the profit earned by that business can be considered as the source of Bangladesh.
3. Determine if contracts for purchase and sale are executed (e.g. negotiated, terminated and executed) for the profit earned from the trade of goods and products.
4. For a commission-earning business, determine where the commission agent’s activities take place. If such activities are carried out in Bangladesh, then the income will be considered as the source of Bangladesh.
What is determined to be a foreign source of income, it is important to determine whether it is received in Bangladesh. Income earned from outside Bangladesh is considered to be received in Bangladesh when:
1. Transmit, send or bring to Bangladesh in the form of cash, checks, dividends, electronic transfers, etc .;
2. Used to repay any debt in the case of business or business conducted in Bangladesh; Or
3. Used to purchase any movable property brought to Bangladesh.
Bangladesh Taxation on Foreign-Sourced Income

Qualifying 4 Conditions for Tax Exemption

To enjoy the tax deduction, you need to provide the following information in your income tax return. For Taxation on Foreign-Sourced Income the followings should be keep in mind:
1. The nature and amount of income received;
2. Jurisdiction from which income is derived;
3. Foreign jurisdiction title tax rate; And
4. Confirmation that the foreign tax was paid in the jurisdiction in which the income was paid. This is to meet the “taxable” condition.

Learn About “Subject to Tax” Condition With Us

In order to meet this condition, the specified Taxation on Foreign-Sourced Income received in Bangladesh must be taxed in the foreign country from which the income is received.
1. Dividend tax, which is the income tax levied on dividends by the foreign country of origin; And2. Underlying tax, which is the income tax payable or dividends paid on income paid by a dividend-paying company.

Dynamic "Tax-exempt" For Core Business Activities

The regulator will consider that the “subject to tax” condition has been met if the income in the foreign jurisdiction is exempt from tax due to which the tax incentive paid for the actual business activity performed in that jurisdiction. The following documents must be prepared and maintained:
1. A declaration of the company that the foreign jurisdiction has exempted foreign income from tax because of the substantial business activities conducted by the company under that jurisdiction.
2. A copy of the tax incentive certificate / approval letter issued by the foreign authority. In the case of dividends received from foreign sources, a dividend voucher (if available) specifies that the dividend is exempt from tax due to the tax incentives paid by the company to the taxpayer which will be sufficient to conduct sufficient business activities under foreign jurisdiction.

FAQ For Bangladesh Taxation on Foreign-Sourced Income

Is foreign income taxable in Bangladesh?

Income tax is payable by one person on total income from all sources, except exempt income. However, foreign nationals, although residing for tax purposes, are generally taxed only on income earned by working in Bangladesh and foreign income derived from Bangladeshi sources.

Which part of the salary is taxable in Bangladesh?

 1,00,000.00 of taxable income, tax rate 5%, in subsequent money. 3,00,000.00 The tax rate is 10%, on the next money. 4,00,000.00 Tax rate 15%, on subsequent money 5,00,000.00 The tax rate is 20% and the remainder is 25%

How can I pay my income tax in Bangladesh through NetworkBD?

 In order to file tax in Bangladesh, every assessee has to submit it to the government after determining the amount of income tax. The online treasury will pay your taxes through pay-order, invoice treasury or NetworkBD and help to submit the duly signed and verified return form along with the required documents to the concerned tax circle.

How to avoid double taxation on foreign income?

Citizens of Bangladesh who live abroad can be exempted from paying tax on income earned in other countries if they are eligible for foreign-earned income exemption, so that they can avoid double taxation.

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