The Board of Investment has decided to review the pay structure for foreigners working in the private sector in Bangladesh amid widespread allegations of tax evasion against the foreign nationals and their local employers, BoI officials said.
They said that most of the foreign nationals working in Bangladesh were paid much more by their employers than the amount mentioned in the work permits mainly for evading tax by both parties.
‘We are looking into whether the existing pay structure is commensurate with the tax deducted from the salaries of foreign employees and remittances they send home,’ BoI member Nabhash Chandra Mandal told New Age on Wednesday.
He said that local employers were supposed to follow the basic pay structure set by the Board of Investment but there were allegations that many employers paid more.
The BoI issues work permit after being ensured that the employer has followed the basic wage structure for foreign employees, he said.
‘If any employers take work permits hiding the actual payment, we can cancel the permit,’ he said.
The National Board of Revenue and other government agencies could detect such irregularities, he added.
Officials said that the BoI last time in 2011 had fixed minimum pay slabs for foreign workers country-wise doing job in Bangladesh in different categories such as manager, technician, engineer and others.
The BoI Guidelines-2011 set minimum basic salary for foreign nationals between $650 and $2000 in accordance with the nationality and field of expertise of the expatriates.
Basic salary for employees from SAARC countries, China, Myanmar, Indonesia, African countries (except South Africa) and other third world countries had been set at minimum $650 to $1,200 based on their positions and skills.
Employees from Malaysia, Thailand, Hong Kong, South Korea, South Africa and other countries would get a minimum basic pay of $850 to $1,500 while basic pay for nationals of the US, UK, Canada, Japan, Australia, Singapore, European countries, New Zealand, KSA, UAE and other developed countries had been set between $1,000 and $2,000.
Foreign nationals working in Bangladesh and their local employers prepare two sets of appointment letters – one for obtaining work permit in which they show less salary and another for official purposes which is the main appointment letter, officials said.
Employers take work permits from the BoI mentioning an amount as salary to be paid to a foreign worker
but in most of the cases they pay him or her more depriving the government of taxes for the additional payment, they said.
In this situation, the BoI has started looking into the matter at the instruction of the Prime Minister’s Office and the home ministry.
The PMO in October asked the BoI and the NBR to take appropriate measures to prevent tax evasion by the foreign nationals working in different sectors, including readymade garment factories, buying houses, liaison offices and other domestic and foreign companies.
The PMO also forwarded an intelligence report which identified some cases in which foreign workers were receiving three or four times the amount mentioned in the work permit.
NBR officials said that both the employers and employees hide the actual payment to evade income tax.
‘Foreign workers have to pay income tax at the rate of 25 per cent of their income. The amount of tax will be less if a low salary is shown,’ an NBR official said adding that employers also evaded tax in this way as they showed less income in income tax returns.
So, the revenue board was also in favour of revising the existing structure, he said.
A high-level meeting would be held soon between the home ministry, the NBR and BoI to discuss the issue, BoI officials said.
According to different sources, currently around 3.5 lakh foreigners are working in the country and most of them are doing job illegally.
According to BoI, only around 12,000 foreign nationals are doing job in Bangladesh with work permits from the board.
A few more thousand foreigners are working in the country with permission from the Bangladesh Export Processing Zone Authority.
But there is no official figure on the number of foreign nationals working illegally in Bangladesh, BoI officials said.
-With New Age input
