Payroll taxes in Bangladesh that are of key importance to employers include income tax withholding, provident fund contributions, and WPPF contributions. Learn more about the processes for setting up payroll, calculating taxes, submitting payments compliantly, and adhering to due dates in Bangladesh.
Capital City
Dhaka
Currency
Bangladesh Taka
(
৳
)
Timezone
BST
(
GMT +6
)
Payroll
Monthly
Employment Cost
0% - 5%
Managing payroll taxes in Bangladesh is crucial for businesses of all sizes. Employers must navigate various tax obligations, including income tax withholding and social security contributions, to ensure compliance and maintain positive employee relations. Understanding these requirements helps mitigate risks such as penalties and legal issues.
This guide aims to provide clarity on the key aspects of payroll taxes in Bangladesh, including tax calculations, deadlines, and filing procedures. By the end, you'll be equipped with the knowledge to manage payroll taxes compliantly.
1 July - 30 June is the 12-month accounting period that businesses in Bangladesh use for financial and tax reporting purposes.
The payroll cycle in Bangladesh is usually monthly, with employees being paid on or before the last day of the month.
The minimum wage for employees in Bangladesh is typically 78 BDT per hour, amounting to ~12,500 BDT per month for a typical 40 hour work week.
Employees who have worked for at least one year are entitled to a Festive Bonus, twice per year.
In Bangladesh, employers are responsible for several payroll-related taxes. Each type has specific regulations that businesses must adhere to.
Employers are required to withhold income tax from employees' salaries based on progressive tax rates. The tax brackets are as follows:
Employers must deduct the appropriate amount each month and remit it to the National Board of Revenue (NBR) by the 15th of the following month.
While not mandatory, many private sector establishments in Bangladesh establish provident funds for their employees. These funds are governed by the Bangladesh Labor Act, 2006. If at least three-fourths of the total number of workers employed in an establishment request it in writing, the employer is required to constitute a provident fund.
Both employees and employers contribute to the provident fund, with the employee's contribution ranging from 7% to 8% of their salary. The employer is required to make a matching contribution and deposit both amounts to the employee's provident fund account every month.
Certain companies are required to contribute 5% of their profits to the Workers Profit Participation Fund. This fund is intended to share a portion of the company's profits with its employees. Notably, there is no employee contribution to this fund; it is solely the employer's responsibility.
The Gratuity Fund provides a lump sum payment to employees upon termination or retirement after a certain period of service, typically five years or more. The calculation is usually based on the last drawn basic salary and years of service. Gratuity payments are tax-exempt up to a certain limit.
Employers are required to contribute a percentage of their employees' wages to the Workers' Welfare Foundation. The specific rates vary, but these contributions provide financial assistance to workers and their families in case of death, injury, or other hardships.
Employers often provide group insurance coverage for employees, offering benefits in case of death or disability. The rates depend on the employer's insurance policy and the number of employees covered.
Employers are responsible for paying maternity benefits to eligible employees. The specific amount and duration of the benefit are outlined in the Bangladesh Labor Act.
Depending on the industry and company size, employers may provide additional benefits such as:
These benefits are typically offered to enhance employee satisfaction and retention.
Setting up payroll correctly is essential for legal compliance and to maintain employee trust. Here's how you can establish a compliant payroll system in Bangladesh:
Assume an employee earns a monthly salary of BDT 50,000. Based on the tax brackets:
Total tax payable = BDT 5,000 + BDT 30,000 = BDT 35,000
Therefore, the employee's net salary after tax would be:
BDT 50,000 - BDT 35,000 = BDT 15,000
Employers can submit payroll taxes through the following methods:
Understanding the tax obligations for both employers and employees is crucial when operating in Bangladesh's business landscape. Both mandatory and optional contributions play a significant role in the overall compensation and welfare of employees. This section explains how taxes and statutory fees affect payroll and individual earnings in Bangladesh.
Employer payroll contributions are generally estimated at an additional 0% - 5% on top of the employee salary in Bangladesh.
In Bangladesh , the typical estimation for employee payroll contributions cost is around Employees in Bangladesh are not required to make compulsory contributions to social insurance.%.
The individual income tax in Bangladesh follows a progressive rate structure, ranging from 0% to 30%. Overarching tax rates may vary according to different factors, including household status and the number of dependents. In addition, the lesser of 450,000 BDT or one-third of the total taxable income is exempt from Income tax. For foreign residents, a flat tax rate of 30% applies.
There are no mandatory pension contributions in Bangladesh.
Global employers operating in Bangladesh often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Bangladesh.
Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.
In Bangladesh, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.
Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.
Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.
Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.
A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Bangladesh.
Key functions of a payroll management platform can include:
Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
Copied to Clipboard
FAQS
Payroll taxes are calculated based on an employee's gross salary, applying the appropriate tax brackets. Employers must also account for any additional statutory contributions, such as provident fund and WPPF.
Employers can choose from various payroll cycles, including:
- Monthly: Common in most sectors.
- Weekly: Often used in retail and hospitality industries.
- Bi-weekly: Less common but used by some organizations.
Key elements include:
- Gross Salary: Total earnings before deductions.
- Deductions: Taxes and statutory contributions.
- Net Salary: Earnings after deductions.
- Bonuses: Annual or performance-based incentives.
Payroll tax rates range from 0% to 25%, depending on the employee's income level. Employers must also contribute to the provident fund and, if applicable, the WPPF.
Calculate The true Cost of Employment
global compensation Benchmarking tool
work permits & visas regulations by country
Guides to hiring in the USA by state
Payroll guidance by country
Leave Policies By Country
Overtime & Working Hours By Country
Termination & Severance Policies By Country
minimum wage requirements by country
employee benefits guidance by country
Where to next?
Your “everything you ever needed to know” guides to compliant global employment around the world.