Freelancer Tax in Bangladesh – A Complete Overview

Freelancer Tax in Bangladesh – A Complete Overview

With the growth of the digital economy, freelancing has emerged as a significant source of income for individuals in Bangladesh. Freelancers provide services such as graphic design, programming, content writing, and digital marketing to clients across the globe. However, many freelancers remain unclear about their tax obligations, legal recognition, and compliance requirements under Bangladeshi law.

Legal Status of Freelancers

Freelancers are considered individual service providers or self-employed professionals. While there is no specific law exclusively governing freelancers, their income is subject to taxation under the Income Tax Ordinance, 1984.

They may also be considered sole proprietors under general commercial laws, and may register a trade name, obtain a TIN, and even apply for a trade license in certain cases.

Is Freelancer Income Taxable in Bangladesh?

Yes. Income earned by freelancers is taxable if the annual income exceeds the tax-free threshold prescribed by the National Board of Revenue (NBR). The tax applies regardless of the source country of the income.

Note: Income received from outside Bangladesh is treated as foreign income, but it is taxable when remitted to Bangladesh.

Income Tax Threshold and Rates (FY 2024–25)

Category	Tax-Free Threshold	Tax Rate (Progressive Slabs)
General Individual	BDT 3,50,000	5% to 30% depending on income slab
Female/Senior Citizen	BDT 4,00,000	5% to 30%
Disabled Person	BDT 4,75,000	5% to 30%

Income up to the threshold is tax-free. Above that, tax is payable at progressive rates.

Taxpayer Identification Number (TIN)

Freelancers must obtain a TIN certificate from the NBR. It is required for:

• Filing income tax returns
• Receiving foreign remittances over a certain limit
• Applying for trade license or bank account (in business name)
• Participating in tenders or government projects

Apply online via https://etaxnbr.gov.bd.

Income Tax Return Filing for Freelancers

Required Steps:

1. Obtain TIN Certificate
2. Maintain Records of income, invoices, and bank statements
3. Calculate Total Income (local + foreign)
4. Claim Valid Deductions (if applicable)
5. Submit Return using the NBR online system or manually
6. Pay Tax Due before the deadline

Return Filing Deadline:

• Usually by 30 November each year, unless extended by NBR

Supporting Documents

• TIN certificate
• Bank statements showing remittance receipts (Payoneer, Wise, etc.)
• Invoices issued to clients
• Expense records (if claiming deductions)
• Proof of investment (for tax rebate)

Tax Rebate for Investments

Freelancers can reduce their tax liability by investing in:

• Government savings certificates (Sanchayapatra)
• Life insurance premiums
• Retirement savings schemes
• Approved mutual funds

Maximum allowable rebate is 15% of taxable income or up to BDT 10 lakh of investments, whichever is lower.

Is VAT Applicable for Freelancers?

Currently, VAT is not applicable to most freelancers offering services to foreign clients. According to VAT Act 2012 and NBR policy, export of services is zero-rated, meaning it is exempt from VAT if payment is received in foreign currency.

However, freelancers dealing with local clients may have to obtain BIN and pay VAT if their annual turnover exceeds the threshold (BDT 50 lakh as per latest NBR rule).

Withholding Tax on Remittances

As of now, foreign remittances received by freelancers are not subject to any deduction at source if they are properly documented and routed through legal banking channels.

Banks may ask for a TIN and source declaration for large transactions.

Trade License for Freelancers

While not mandatory, freelancers can optionally obtain a trade license under the category of “IT-enabled services” or “Consulting/Design/Software services”. This helps in:

• Opening bank accounts in business name
• Establishing credibility with clients
• Participating in official programs and tenders

Trade license can be obtained from the local city corporation/municipality.

Summary Table

Aspect	Status / Requirement
TIN (Taxpayer ID)	Mandatory if income exceeds tax-free threshold
Tax Applicability	Yes, as per Income Tax Ordinance
VAT on Foreign Services	Exempt (zero-rated export of service)
Return Filing Deadline	30 November (usually)
Supporting Documents	Bank statements, invoices, TIN, expense proof
Trade License	Optional but beneficial
Investment Tax Rebate	Up to 15% rebate for eligible investments
Withholding on Remittance	Not applicable if remitted via legal banking channels

Freelancers in Bangladesh are required to comply with tax laws like any other taxpayer. With increasing digital payments and remittance tracking, freelancers are encouraged to regularize their tax status by obtaining a TIN and filing annual income tax returns. Compliance not only avoids penalties but also opens doors to financial and legal benefits.