Bangladesh Bank has directed the banks to deduct tax at a fixed rate from the income of a non-resident person or organization for outward remittance in exchange of service.
The central bank’s instruction was accompanied with a letter containing instructions of the National Board of Revenue (NBR) to cut tax for outward remittances.
The Foreign Exchange Policy Department of BB issued the circular on Wednesday and sent it to the authorized dealer banks engaged in foreign exchange transactions.
According to a letter of NBR to banks in case of sending invoice value to the non-resident, the remaining amount can be remitted by deducting tax on the said amount at the applicable rate.
In case of sending the full bill to the non-resident, tax has to be deducted and paid on the calculated bill considering the applicable tax.
The NBR letter stated that if a person sent invoice value of Tk100 for consultancy service to any non-resident individuals, banks would send Tk 80 but deducting tax of Tk 20.
In case of sending cash value of Tk 100 as consultancy service of any individual, then banks would cut Tk 25 as tax including sources income tax and send Tk 75 to the non-resident foreign citizens.
As per the instructions of the National Board of Revenue, tax has to be paid in the name of a non-resident.
If any irregularity is observed in the case of tax deduction and deposit at source, it can be recovered at any time. In this case additional amount will be recoverable at simple interest rate of 2 per cent per month on the defaulted amount.
Source: United News of Bangladesh