Country Spotlight: Employer of Record in Bangladesh

Tucked along the Bay of Bengal, where bustling rickshaws, ancient rivers, and resilient entrepreneurs paint a picture of ambition and agility — Bangladesh is fast becoming one of South Asia’s most exciting frontiers for global expansion.

With its youthful population, competitive labor costs, and increasing openness to foreign investment, Bangladesh is more than a textile powerhouse — it’s a strategic launchpad for businesses aiming to make their mark in Asia.

But diving into the employment landscape of Bangladesh isn’t as simple as ordering a cup of chai from a street stall. The country's labor laws, payroll practices, and compliance frameworks require precision, patience, and the right partner. 

And Enter: Employer of Record (EOR)

Hiring in Bangladesh: How an EOR Helps

An EOR in Bangladesh acts as your legal employer — managing everything from hiring and payroll to benefits and taxation — while you focus on scaling your operations. No need to set up a local entity or lose sleep over compliance.

Think of it as your business rickshaw driver — maneuvering smoothly through traffic while you enjoy the ride.

Payroll in Bangladesh: More Than Just Numbers

Payroll in Bangladesh isn’t bound to a specific pay cycle by law — companies can choose a schedule that suits them. But that doesn’t make things simple. Every payroll run must comply with a matrix of local earnings and statutory deductions.

Key Inclusions

• Statutory Earnings

  • Earned Basic — the base for calculating Provident Fund (PF).
  • Taxable Earnings — trigger income tax deductions.
     

• Statutory Deductions

  • Provident Fund (PF): 7–8% of basic wages, matched by the employer.
  • Income Tax (IT): Monthly deduction based on income slabs.

Taxation in Bangladesh: Filing Rules and Employer Duties

In Bangladesh, the fiscal year runs from 1 July to 30 June. The tax filing window opens post-June and ends on 30 September. All resident and non-resident assignees earning above the taxable limit must file an Income Tax Return — no exceptions.

Highlights

• Tax deduction slabs vary by gender and age.
• Monthly tax: Deducted and remitted by the employer.
• TIN (Taxpayer Identification Number): Mandatory for tax filing.
• Penalties: Delay in filing attracts a 10% penalty (minimum BDT 1,000) and an additional BDT 50 per day until filed.

With tax brackets scaling up to 25%, an EOR ensures full compliance with tax regulations by managing:

1. Gender-based tax slabs:

• Male employees: Tax-free income up to BDT 350,000
• Female employees and individuals aged 65+: Tax-free income up to BDT 400,000

2. Progressive tax rates that increase based on income, capped at 25%
3. Applicable exemptions:

• Up to BDT 450,000 or 1/3 of annual income, whichever is lower, is tax-exempt

4. Tax rebate slabs:

• 10% rebate on income up to BDT 1,500,000
• 15% rebate on income exceeding BDT 1,500,000

5. TIN (Taxpayer Identification Number): Mandatory for all tax filings
6. Timely income tax return filing: Between 1 July and 30 September each year
7. Penalty avoidance: Prevents fines such as a 10% penalty or BDT 50 per day for late returns

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Employee Registration: Mandatory Documents

Before onboarding, every employee must have

• A National ID (NID)
• An e-TIN

No TIN? No tax return. It’s that simple.

For expats, the checklist gets longer

• Passport
• Valid visa or work permit (A3/E1 visa holders may use visa as a permit)
• SB & NSI clearance
• e-TIN

An EOR handles all registrations on your behalf — speeding up time-to-hire and avoiding unnecessary delays.

Work Hours & Overtime: Straightforward Structure

• Standard work hours: 8 per day
• Overtime pay: Twice the hourly basic rate
• Night shifts and weekend wages: Based on company policy

Late three times? It’s considered a day’s absence — according to labor norms.

With Neeyamo’s EOR services, a modern time and attendance system ensures accurate tracking, error-free payments, and zero compliance missteps.

Leave Policies: A Culture of Care

Like a serene walk along the Buriganga River, Bangladesh’s leave structure is thoughtfully paced.

• Casual Leave (CL): 10 days/year
• Sick Leave (SL): 14 days/year
• Festival Holidays (FH): 11 days/year
• Annual Leave (AL): 1 day for every 18 days worked
• Maternity Leave (ML): 16 weeks (8 weeks before and after childbirth), for women with fewer than two children

EORs ensure accurate leave tracking and payroll impact — including leave encashment, calculated as (Basic Pay/30) × No. of days.

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Provident Fund: Not Mandatory, But Powerful

While not legally required, a PF becomes mandatory if 75% of employees in a company request it in writing. Setting it up isn’t easy — it involves a trust deed, registration, and a six-month timeline.

But once in place, employers must:

• Contribute up to 8% of basic wages
• Maintain annual audited statements
• Invest PF funds as per regulatory norms

An experienced EOR navigates this setup, maintains records, and ensures your PF is as compliant as it is impactful.

For Expats: What You Need to Know

Tax Compliance

• Foreign nationals working in Bangladesh must comply with local income tax regulations, just like residents.

Visa Exceptions

• Certain visa types (like A3 or E1) may exempt assignees from needing a separate work permit — the visa itself acts as the permit.

TIN Requirement

• An electronic Taxpayer Identification Number (e-TIN) is mandatory for filing tax returns in Bangladesh.

EOR Advantage: An Employer of Record manages

• Work permits and visa compliance
• SB & NSI clearances
• e-TIN registration
• Seamless onboarding and integration of expat employees

Social Security Insight

• Bangladesh does not have a formal social security system.
• However, companies of a certain size are legally required to contribute 5% of their profits to a Workers Profit Participation Fund (WPPF).

EOR’s Role in Compliance

A knowledgeable EOR ensures compliance with all statutory obligations, including WPPF contributions — even those not immediately obvious to foreign businesses.

Why Choose Neeyamo as Your EOR in Bangladesh?

Just like Bangladesh balances tradition and transformation, Neeyamo blends local expertise with global reach — making your expansion journey effortless. Not convinced yet? Here's why we're your ideal partner:

Clueless with Compliance? Navigate complex international laws confidently.
Cost Concerns? Eliminate local entity setup, and optimize payroll.
Riddled with Risks? Minimize legal and financial risks globally.
Hefty HR operations? From onboarding to offboarding, we take care of your employee life cycle.
Shoulder to Support? 24/7 expert assistance in 50+ languages.
Neeyamo? Your key to effortless global expansion!

Reach out to irene.jones@neeyamo.com to start your expansion in Bangladesh today!