Remittance vs. Resident Foreign Income: Tax Rules & Incentives in Bangladesh

The tax treatment of foreign funds in Bangladesh depends on whether they are classified as Remittance or Resident Foreign Income.

1. Remittance (Wage Earners' Income)

This refers to money sent by Bangladeshi nationals working physically abroad through formal banking channels.

• Tax Status: Generally exempt from income tax.
• Cash Incentive: The government provides a 2.5% cash bonus on the total amount sent through legal channels.
• Example: If you send BDT 100,000, your recipient will receive an additional BDT 2,500.
• Requirements: For amounts over BDT 500,000, the beneficiary must submit the remitter's passport copy and proof of employment.

2. Resident Foreign Income (Freelancing/Remote Work)

This is income earned by an individual residing in Bangladesh from services provided to foreign clients.

• Tax Status:
  • Tax-Exempt: Income from specific IT-enabled services (e.g., software development, digital marketing, AI) is exempt until June 30, 2027, provided you have a valid Trade License and TIN.
  • Taxable: For non-exempt services, this is treated as global income and taxed at regular rates.
• Tax Deduction at Source (TDS): Banks typically deduct 10% tax at source on service fees coming from abroad.
• Incentive Status: Not eligible for the 2.5% government remittance incentive. The incentive is strictly for migrant workers residing overseas.

Summary Comparison

Feature	Remittance (Expatriates)	Resident Foreign Income (Freelancers)
Source	Migrant workers living abroad	Resident providing services from Bangladesh
Cash Incentive	2.5% Government Bonus	No Incentive
Tax Status	Tax-Free	10% TDS (unless under IT exemption)
Legal Channel	Banks, bKash, Nagad, etc.	SWIFT, Payoneer, Wise, etc.