foreign remittance, business

Foreign Remittance  

 Today I am going to discuss about foreign remittance which is a very important issue in Bangladesh . A lot of Bangladeshies live in different parts of the world. They earn and send foreign currency . But the problem they face at the time of assessment whether the currency sent by them is exempted from tax or not .

Foreign remittance exempted from tax

 As per S.R.O. No. 216-Law/ Income tax/2004 dated 13/07/2004 foreign income of a Bangladeshi national , irrespective of resident or non-resident, is exempt from payment of tax if it comes through official channel.

Is every type of foreign income remittance? 

If any person receives  any amount of foreign currency in Bangladesh for his activities  ( service ) with that country ,it  will not be treated as remittance. For example , income from working in internet is not remittance .  

 It is to be noted that remit means send . If a person does not send / remit currency  through banking channel from a foreign country it cannot be remittance.

 Declaration at the air/ sea port

When a person comes from a foreign country he has to declare the currency he has with him before the customs at the air or sea port  . It is to be shown as income in his return.

 If tax paid by a resident  Bangladeshi in a foreign country without tax treaty-

 clearance certificate:-

 If any resident assessee ( tax payer) wants to prove to the satisfaction of the DCT that he has paid tax at foreign country with which there is no reciprocal tax treaty with Bangladesh , he has to show clearance certificate from that country

manners of paying tax to that country:-

by deduction or otherwise on any income which has accrued or arisen to him outside Bangladesh

 how to calculate tax in Bangladesh:-

tax payable by the assessee (tax payer)       _             a sum equal to the tax  

in Bangladesh                                                            calculation on such income

(doubly taxed) at the average         rate of tax of Bangladesh or the average rate of tax of the foreign country

whichever is less.

Business between resident and non resident

        Business may be carried on between a resident and a non resident .The course of business may be so arranged that the resident makes either no profit or profits less than the ordinary profit in that business. Such an arrangement might deprive Bangladesh Govt. from tax. In such cases the resident may be charged in respect of the profits which he has not in fact made but which he might reasonably be considered to have made  i. e on accrual basis. (sec.104). 

D CT will determine amount of income.