New tax rules for citizens leaving Bangladesh and expats filing abroad

The tax system is a vital foundation for the socio-economic structure of Bangladesh. Just as there is a specific process for determining taxes for every person, institution, or company within the country, special provisions have been included in the Income Tax Act 2023 for individuals who plan to leave Bangladesh and Bangladeshi taxpayers residing abroad.

The primary objective of these provisions is to ensure proper and transparent payment of tax on the income earned during the period of a natural person's stay in Bangladesh before their departure.

Tax Assessment for Natural Persons Leaving Bangladesh

According to Section 193 of the Income Tax Act 2023, the tax assessment process for a natural person intending to leave Bangladesh begins before the end of their income year. This step is crucial in preventing tax evasion.

If any tax has been determined before the person's departure, the tax will be calculated for the period from the last day of their income year to the date of their expected departure from Bangladesh.

In other words, the tax determined for the period between the date of their expected departure and the last income year will remain valid and will be counted as part of the fiscal year.

If the individual has not been taxed before, the tax will be imposed on their entire income for the period they stayed in Bangladesh, up until their departure.

This tax will be levied at the applicable rate, and the tax for the period from the last income year to their departure will be considered part of that fiscal year.

Therefore, expatriates must ensure that their total income for the period of their stay is calculated before leaving Bangladesh.

To streamline the tax assessment process, the deputy commissioner of taxes plays an essential role according to the provisions of the Act. The deputy commissioner will issue a notice to the individual leaving Bangladesh, instructing them to submit necessary documents and information within a specified period (not less than seven days).

This includes furnishing a return in the prescribed form and manner to be filed by the taxpayer under Section 166, containing their total income for each income year and an estimate of their total income at the end of each full income year, up to the date of their expected departure from Bangladesh.

This process follows the requirements outlined in Section 172 of the Act, ensuring that the taxpayer is aware of their legal obligations and can take the necessary actions in a timely manner.

E-Return Filing for Bangladeshi Taxpayers Residing Abroad

In the past, individuals living abroad could file their income tax returns through tax lawyers or family members. With the introduction of the online income tax return system, taxpayers residing abroad are now able to file returns electronically.

According to the guidelines of the National Board of Revenue (NBR), e-filing is not mandatory for Bangladeshi taxpayers residing abroad, but they are allowed to file online if they wish.

To facilitate this, the NBR has introduced a new system for Bangladeshi taxpayers living abroad to file e-returns. Instead of using a mobile number for OTP (one-time password) verification, taxpayers residing abroad can now receive OTPs through email to complete their registration for online return filing.

To register for the e-return system, Bangladeshi taxpayers residing abroad should email the NBR at ereturn@etaxnbr.gov.bd, mentioning their TIN number along with passport number, National Identity Card (NID) number, a copy of the visa page or seal, email address, and a recent photograph.

Once the information is verified, an OTP and registration link will be sent to the applicant's email. Using this link and OTP, Bangladeshi taxpayers residing abroad can easily complete their registration and file their income tax returns online.

The main purpose of these special provisions is to ensure transparency and efficient tax management among Bangladeshi taxpayers residing abroad.

When individuals change their career or residence and move abroad, it is important for the revenue authorities of Bangladesh to ensure that taxes on their income during their final period of stay in the country are properly paid.

The Income Tax Act 2023 has further strengthened and streamlined the tax system of Bangladesh. This ensures that citizens starting a new life abroad fulfill their tax obligations while contributing to the country's economy by filing their income tax returns in a timely manner.

Through these measures, both taxpayers and tax authorities can ensure a fair and transparent process for tax payments and timely return submission.

The writer is a financial sector analyst. He can be reached at faysal.aqc@gmail.com