Bangladesh Income Tax and Freelance Software Developers

In this post, I am summarizing some of the NBR documents I found regarding taxation of earnings received as inward remittance from freelance software development. (Some of the pdf documents referred use Bangla fonts).

Recently (from July 2011), some banks of Bangladesh started to deduct advanced income tax at a rate of 10% from inward remittances received by individual software developers which they receive as wage/salary. But people were able to get a full refund for the money by applying to the banks stating that this money was earned from software development.

The reason for the deduction was that in the recent amendment of Income Tax Ordinance 1984, a new section (52Q) has been added (page 14 of this pdf):

52Q. Deduction of tax from resident for any income in
connection with any service provided to any foreign person.-
Any person, responsible for paying or crediting to the account of a
resident any sum remitted from abroad by way of service charges
or consulting fees or commissions or remunerations or any other
fees called by whatever name for any service rendered or any work
done by a resident person in favour of a foreign person, shall
deduct tax at the rate of ten percent of the amount so paid at the
time of making such payment or credit of such payment to the
account of the payee .

But individual/freelance software developers who receive their earnings as remittance should be free from this tax because of the following two SROs.

SRO-216, 2005 (page 10 of this pdf):

Although it says "up to 2008", the exemption has later been extended up to 2013 with section 33 of the Sixth Schedule of Income Tax Ordinance (page 61 of this pdf):

33. Any income derived from the business of software development and Information Technology Enabled Services (ITES) for the period from the first day of July, 2008 to the thirtieth day of June, [2013]^{Subs. F.A. 2011}:
Provided that the person shall file income tax return in accordance with the provisions of section 75(2)(c) of the Ordinance.

[Explanation : Information Technology Enabled Services (ITES) means-Digital Content Development and Management, Animation (both 2D and 3D), Geographic Information Services (GIS), IT Support and Software Maintenance Services, Web Site Services, Business Process Outsourcing, Data entry, Data Processing, Call Centre, Graphics Design (digital service), Search Engine Optimization, Web Listing, E-commerce and Online Shopping, document conversion, imaging and archiving.]^{Subs. F.A. 2011}

This again has been extended up to 2015:

(৩) paragraph 33 সংশোধনের মাধ্যমে সফটওয়্যার উন্নয়ন ও Information Technology Enabled Services (ITES) থেকে আয় করমুক্ত থাকার মেয়াদ বৃদ্ধি করা হয়েছে। এর মাধ্যমে এ খাতের করমুক্ত আয়ের সুবিধা জুন, ২০১৫ পর্যন্ত বহাল থাকবে।

33. Any income derived from the business of software development and Information Technology Enabled Services (ITES) for the period from the first day of July, 2008 to the thirtieth day of June, [2015]^{Subs. F. A. 2012}

Provided that the person shall file income tax return in accordance with the provisions of section 75(2)(c) of the Ordinance.

The second SRO is SRO-216, 2004 (page 2 of this pdf):



This kind of earning can be claimed as tax-free, as described in the tax-return fill-up guideline here (pages 23-25 of this pdf):