Bangladesh Bank has directed the banks, which are engaged in foreign exchange transactions, to deduct tax at a fixed rate on the service value of a non-resident person or organisation.
The Foreign Exchange Policy Department of the central bank issued the circular on Wednesday. A letter containing instructions of the National Board of Revenue (NBR) in this regard was also sent with the circular, reports UNB.
According to a letter of NBR to banks, in case of sending invoice value to the non-resident, the amount of service value can be remitted after deducting tax on the said amount at the applicable rate.
In the 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 an invoice value of Tk100 for consultancy service to any non-resident individuals, banks would send Tk 80 but deduct 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 person.
“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, an additional amount will be recoverable at a simple interest rate of 2 per cent per month on the defaulted amount.”