The government has kept income from IT freelancing tax-free in the new income tax law as was in the previous Income Tax Ordinance-1984, officials said.
Tax officials of the National Board of Revenue (NBR) have made it clear that no tax at the rate of 10 per cent has been imposed on IT freelancers.
Following a letter of Bangladesh Bank (BB) on deduction of 10 per cent taxes, the freelancers expressed their concern over what, according to taxmen, was misinterpreted in the media.
The BB sent the letter to all private commercial banks in compliance with a letter sent from the Tax Zone-11 instructing deduction of the tax on inward remittances as per section 124 of the Income Tax Act 2023.
"We have kept income from IT freelancing exempted from payment of taxes as earlier. Only tax has been imposed on digital contents in case of revenue sharing," said a senior tax official.
In the sixth schedule of the Income Tax Act, income from IT freelancing has been kept exempted for the period of July 1, 2020 to June 30, 2024, along with 27 other types of digital services.
The tax-exempted digital services include software development, software or application customization, nationwide telecommunication transmission network, digital animation development, website development, website services, web listing, IT process outsourcing, website hosting, digital graphics design, digital data entry and processing, digital data analytics, and graphic information service (GIS). The services also include IT support and software maintenance services, software test lab service, call centre service, overseas medical transcription, search engine optimization service, document conversion, imaging and digital achieving, robotics process outsourcing, cyber security service, cloud service, system integration, e-learning platform, e-book publication, mobile application development services and IT free-lancing.
Earlier, both overseas and local earnings from 'revenue sharing on digital content preparation' was tax-free.
From the current fiscal year, tax at the rate of 10 per cent has been imposed on such services at home and abroad, payment to foreigners by any citizen of Bangladesh, permission to use online platform for advertisement or other purposes.
However, manufacturing, process or conversion, public works, construction, engineering or similar types of work under any contract where money is received from abroad would subject to pay 7.5 per cent tax.
The tax official said any freelancer who would receive payment from a party, without any fixed-term contract or revenue sharing scheme, would be able to enjoy tax exemption on his income.
In case of revenue sharing, such as using platforms like facebook, Google, Tiktok, the government would deduct 10 per cent tax on the receipt, he added.
Officials said Zunaid Ahmed Palak, State Minister for Information and Communication Technology, sought to know about the IT freelancing issue from the NBR on Saturday. He was conveyed that the tax-free provision for the freelancing professionals remained unchanged.
A study by the Oxford Internet Institute (OII) has ranked Bangladesh the second largest source of online workers.
The multidisciplinary research and teaching wing of the University of Oxford has published the study in the Oxford Internet Institute where Bangladesh is just below India and on top of the United States.
On the other hand, an FE report adds, the Bangladesh Bank (BB) on Saturday said remittance inflow through freelancers would remain outside of the purview of tax at source.
It also said workers' remittances would also remain outside the purview of tax at source.
The BB on Wednesday in its circular said that banks would deduct tax at source from inward remittance against service and revenue sharing. The banks will deduct the tax at the rate of 10 per cent.
The Foreign Exchange Policy Department of the BB issued the circular on Wednesday.
BB spokesperson Md. Mezbaul Haque told the FE that tax would be deducted at source on indenting commissions, shipping companies' earnings, and such types of revenue inflows.
He said both workers' remittances and freelancers' remittances were two key areas of foreign exchange inflows which the government was encouraging.
He said the government as well as central bank was encouraging sending remittances through the formal banking channel by expatriate Bangladeshis and freelancers who work for many global IT and similar firms staying in Bangladesh.
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