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The central bank has asked all authorised dealer (AD) banks to follow the National Board of Revenue's (NBR) clarification while deducting tax against outward remittance from income of non-residents.
The central bank issued a circular in this connection on Wednesday, and asked the banks to deduct source taxes against service payment abroad.
"We've asked the banks to comply with Section 56 of Income Tax Ordinance 1984 properly for deduction of tax against outward remittance from income of foreign nationals," a senior official of the Bangladesh Bank (BB) told the FE.
"We've enclosed the NBR's clarification with the circular to help the banks deduct such tax against outward remittance properly," the central banker added.
Amount after deduction of tax from invoice value would be remittable to non-residents, according to the NBR's clarification. "Tax is to be deducted on bill value."
In case of requirement to remit full bill value, new calculation needs to be made - considering the rate of applicable tax, it noted. Tax amount needs to be deposited in the name of non-resident beneficiaries.
Outward remittance would not be considered tax compliant payment in case of tax payment in favour of remitters.
In case of irregularities in tax deduction and payment, the payment can be recovered any time. In that case, the amount of non-payment is recoverable with simple interest rate at 2.0 per cent per month, it noted.
On May 31, 2021, the central bank relaxed its policy, allowing the banks to remit outward payment through international card channels as alternative to traditional banking channel to facilitate transactions.