Expatriate Assignment

With huge concentration in large infrastructural project in Bangladesh and with fast changing technological advancement and cross border opportunities, there has been a substantial increase in the number of foreign nationals (expatriates) employed with multinational corporates coming to Bangladesh for short/long-term assignments.  The purposes of these assignments vary from a highly specialized to company’s managerial representatives as well as from technical know-how to implementation of new projects/policies or bringing in leading industry practices.

 

Adequate plan, knowledge and preparations are essential in respect of foreign exchange movements, lawful employment and movements, tax and regulatory framework of the country by such corporates and their employees.

 

Unknown and unmanaged complexities of the tax system could result in higher tax costs, compliance and double taxation issues in relation to expatriates that need resolution.

 

Apart from enforcement and reputational issues there are severe financial consequences from unlawful employment in Bangladesh. Section 16B of Bangladesh Income Tax Ordinance 1984 states that where any person employs or allows, without prior approval of BIDA or any competent authority of Government, any foreign national work at his business or profession at any time during income year, such person (employer) shall be charged additional tax at the rate of 50% of his tax payable on his income or Taka 500,000 whichever is higher.

 

Further, as per the Bangladesh income tax law, a person may be liable to tax on his global income in Bangladesh after three to four years of his first arrival in Bangladesh. This necessitates the need for planning at the initial stage itself to plan on his tax residency as well as his duration of contract and rotational plans.

 

Key service offerings: 

  • Advise on planning before taking up assignments in Bangladesh with respect to commencement, tenure etc. to enhance tax efficiency and benefits
  • Assistance in reviewing of employment contracts from tax and regulatory perspective
  • Assistance in registering with the Security agencies, depending on nationalities.
  • Assistance in complying existing Bangladeshi tax issues.
  • Determine tax residency status in Bangladesh during the period of assignment
  • Assess tax implications on the benefits and other perquisites that are enjoyed directly and indirectly while staying in Bangladesh (within and beyond the contract)
  • Analyse tax equalisation agreements (available in certain clients) between the employees and the employer from tax and regulatory perspective
  • Assist taxation related certificates in order to assist assessment in the home country
  • Assist tax deductions, deposits, assessments and obtaining tax clearance certificates.
  • Assist final tax clearances when cancelling work permits.
  • Advise on exemption and tax credit mechanism to determine that income is not doubly taxed under different jurisdictions or appropriate credit for foreign taxes is claimed.
  • Determine taxability of employer’s and employee’s contributions to retirement benefits, if applicable, during such Bangladesh assignment.

Assist the expatriate for compliance requirements from their time of entry to their departure from Bangladesh including tax registration, deregistration, filings, cancellation of work permits, closing bank accounts, tax clearances etc.

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