Bangladesh Labour Law 2006 (Amended 2013) and Bangladesh Labour Rules 2015 are the prevailing labour relation regulations currently. However, the Labour Law 2006 is mainly used to govern the relationship between employers and workers. Workers are defined in the law as:
“Worker” means any person including an apprentice employed in any establishment or industry, either directly or through a contractor, by whatever name he is called, to do any skilled, unskilled, manual, technical, trade promotional or clerical work for hire or reward, whether the terms of employment are expressed or implied, but does not include a person employed mainly in a managerial, administrative or supervisory capacity
Considering this, there is ambiguity on whether management staff and employees in the service sector fall under this Act or that relationship can be simply governed through employment contracts. This area is being reviewed by the Bangladesh Courts and a new law is expected soon.
Residency
In Bangladesh an individual is treated as a resident if they have been in Bangladesh for:
Short term visitors and dependents of expatriates not earning any income in Bangladesh are not taxable locally and do not have to file a tax return. Nationality has no impact on taxability.
Taxpayer’s Identification Number (e-TIN)
All individual taxpayers are required to obtain an e-TIN in order to file a tax return. This is relatively easy and can be obtained from http://secure.incometax.gov.bd/TINHome
Deadline for Tax Return Filing
The last date for filing tax return is 30 November following the end of the income year which is now termed as Tax Day.
Taxability of Income from Salary:
Employers are responsible for deducting taxes at source after providing for allowances from monthly salary. However, all employees are responsible for filing of their own returns at the end of the tax year. If, however, an individual has other sources of income such as house rent, interest income etc., he/she is responsible for filing accordingly and paying taxes at the time of filing. Income from salary includes the following:
Individuals enjoying salary income are subject to tax on salary and all other benefits. A summary of taxability and allowances are as below:
| Income Head | Taxability |
|---|---|
| Basic Salary | Fully taxable |
| Allowance of any kind | Fully taxable |
| Rent free accommodation | Annual Value of accommodation if the rent is fully paid by the employer or if the accommodation is provided by the employer |
| Accommodation at concessional rate | Difference between annual rental value and actual rent paid |
| Motor vehicle benefit (per vehicle) | If institution, the following information/documents will be required:
If individual:
|
| Medical Expenses | Fully taxable. However, medical expenses paid to an employee (other than a shareholder director) for heart, kidney, eye, liver or cancer surgery are fully exempted. |
| Conveyance Allowance (local & foreign) | Reimbursements against actual bills/receipts for business purposes are fully exempted. However, any benefit paid in addition to this in cash is fully taxable |
| Festival Bonus | Fully taxable |
| Performance Bonus | Fully taxable |
| Leave encashment | Fully taxable |
| Telephone/Mobile allowance | Tax free as long as it is for official use. |
| Dearness allowance | Fully taxable |
| Other allowances | Fully taxable |
| Any reimbursements | Tax free as long as it was incurred for official purposes |
| Employer’s contribution to registered PF | Fully taxable |
| Interest income from registered PF | Fully exempted |
| Registered gratuity fund | Exempted up to Tk. 25,000,000 |
| Leave fare assistance | Fully taxable |
| Government pension fund | Fully exempted |
| Workers’ profit participation fund (WPPF) | Fully taxable |
The below table outlines the exemptions on salaries for both General Employees and Government employees:
| Income Head | Taxability |
|---|---|
| Basic Salary | Fully taxable |
| Allowance of any kind | Fully taxable |
Employers usually deduct taxes at source after providing for allowances from monthly salary. However, all employees are responsible for filing of their own returns at the end of the tax year. If, however, an individual has other sources of income such as house rent, interest income etc., he/she is responsible for filing accordingly and paying taxes at the time of filing.
Income tax is charged to individuals on fixed slabs. The slabs of total income and corresponding tax rates are given below:
| Amount of Taxable Income | Rate |
|---|---|
| First Tk. 350,000 (for male taxpayers) | Nil |
| First Tk. 400,000 (for female and senior taxpayers above the age of 65) | Nil |
| First Tk. 475,000 (for taxpayers of third gender or with disability) | Nil |
| First Tk. 500,000 (for Gazetted freedom fighters) | Nil |
| On the next Tk. 100,000 | 5% |
| On the next Tk. 400,000 | 10% |
| On the next Tk. 500,000 | 15% |
| On the next Tk. 500,000 | 20% |
| On the next Tk. 2,000,000 | 25% |
| On the balancing amount | Flat 30% |
A work permit is mandatory for every foreign national seeking employment in Bangladesh. Three government authorities issue work permits in Bangladesh.
Please find the below table which outlines the types, durations and conditions for visa application in Bangladesh:
| Type | Rate | Duration/Fees/Conditions | Required Documents |
|---|---|---|---|
| B (Business) | Purpose: Analyzing investment potential, participating in business-related meetings (board, general, technical), recruiting manpower from Bangladesh, engaging in trade fairs and exhibitions, verifying the quality of Bangladeshi products, negotiating with suppliers, acting as a tour conductor, enhancing academic networks, and collaborating with foreign partners or serving as director in a company. Eligibility: Business visitors engaged in the above activities. |
| Eligibility:
Extensions:
|
| PI (Private Investor) | Purpose: Investment in industrial/commercial establishment Eligibility: Foreign investors in 100% foreign ownership or joint ventures (non-government sectors) |
| First Visa:
Extensions:
|
| FPI (Dependent Family Members of PI) | Purpose: Staying with Family Eligibility: Spouse, dependent children, legal guardian of children, or legal family members of individuals under category PI |
| First Visa:
Extensions:
|
| E2 (Employment) | Purpose: Employment in Bangladesh. Eligibility:
|
| First Visa:
Extensions:
|
| Type | Rate | Duration/Fees/Conditions | Required Documents |
|---|---|---|---|
| FE2 (Dependent Family Members of E2) | Purpose: Staying with Family Eligibility: Spouse, dependent children or legal family members of E2 Visa holders |
| First Visa:
Extensions:
|
| E3 (Employment) | Purpose: Employment for machinery/software installation, maintenance, or inspection. Eligibility: Professionals engaged in installation or project supervision. |
| First Visa:
Extensions:
|
| FE3 (Dependent Family Members of E3) | Purpose: Staying with Family Eligibility: Spouse, dependent children, legal guardian of children, or legal family members of E3 Visa holders |
| First Visa:
Extensions:
|
In Bangladesh, all factories and establishments must be registered with the appropriate regulatory authority in compliance with the Factories Act 1965 and its associated rules. A Factory Establishment License is a mandatory permit for operating any factory within the country. The district offices of the Department of Inspection for Factories and Establishments (DIFE) are the designated authorities responsible for overseeing various functions related to factories, including their construction, establishment, expansion, licensing and the renewal of licenses.
The Department of Inspection for Factories and Establishments (DIFE) operates under the Ministry of Labour and Employment and plays a pivotal role in ensuring the welfare, safety and health of workers across multiple sectors that contribute significantly to the national economy. Through the enforcement of local labour laws, DIFE has become a leader in fostering a safe and healthy work environment while improving the quality of life for wage earners.
In addition to enforcing compliance, DIFE has expanded its mandate to include advisory services for employers and workers, offering guidance on the most effective ways to meet legal requirements. The department actively collaborates with government entities, private organizations and international bodies, notably the International Labour Organization (ILO), to promote safe and conducive working environments and establish a robust regulatory framework that aligns with global standards.
Despite its critical role, DIFE has faced some challenges due to limited manpower, infrastructure and logistical resources. These limitations are particularly evident when considering the sheer number of factories, shops and commercial establishments under its jurisdiction. Nonetheless, DIFE has made notable strides in ensuring compliance, especially within the garments industry, which remains a cornerstone of the country’s economy.
While DIFE registration has traditionally been associated with manufacturing facilities, it is increasingly being adopted by service and commercial sectors. This trend underscores the growing recognition of compliance with labour regulations as a vital component of sustainable business operations.
To understand the necessity of DIFE registration for all establishments in Bangladesh, the following extracts from the Labour Rules, 2015, provide valuable insights:
Eligibility for RegistrationOwners of factories, industrial establishments, commercial firms, banks, insurance firms, shops and contracting firms must register and submit two sets of applications to the Inspector General.
Submission of Service Rule BookEmployers with previously established service rules are required to update and submit them for approval within three months of renewal of the license or as soon as the service rule book is updated, to ensure compliance with current legislation. The updated rules must be approved by the Inspector General.
Process of approval of the service rulesThe Director General reviews the submitted draft service rules, consults the employer and trade unions, and gathers feedback from workers. Following this process, necessary amendments are made, after which the service rule book is finalized and approved by the Inspector General.
Existing service rulesEmployers with previously established service rules are required to update and submit them for approval within three months to ensure compliance with current legislation. The updated rules must be approved by the Inspector General.
License Issuance and RenewalThe Inspector General issues licenses after verifying compliance and processing the necessary fee payment. Licenses are valid until June 30 of the fiscal year in which they are issued. Renewal applications must be submitted before the expiry date to avoid penalties. Licenses not renewed within one year are deemed invalid, which may result in the establishment's closure.
Late renewals insecure additional fees:Employers who permanently close their establishment or are unable to continue operations must submit a closure application along with the original license to the Inspector General for potential cancellation.
Licenses may also be suspended by an inspector if the establishment poses safety risks. To reactivate a canceled or suspended license within the same fiscal year, employers are required to pay double the renewal fee for each year the license was inactive
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Social Security System
Bangladesh does not have a mandatory social security system for private sector employees and employers are not required to set-up or deduct any social security contributions.