Good news for students studying abroad. According to the proposed budget, starting from the upcoming fiscal 2024-25, there will be no requirement to pay source tax when sending money abroad for tuition fees, business promotion expenses and certain other cases.
Other instances exempt from source tax include sending payment for professional body membership fees, expenses for liaison offices, payments to authorities, expenses related to product development and marketing, and security deposits.
According to tax analysts, the initiative will streamline the outward remittance process, making it hassle-free and reducing the tax burden of individuals. If approved, sending money abroad for personal and institutional purposes will become more convenient and cost-effective.
A senior NBR official told TBS that although source tax is technically required to be deducted for sending tuition fees overseas, it is not consistently applied in practice. Similarly, while rules exist for deducting source tax in various cases, application varies, sometimes necessitating a certificate from the NBR. Overall, the process is deemed cumbersome.
Moreover, entrepreneurs in Bangladesh argue that source tax hinders the development of Bangladeshi businesses abroad. Hence, it has been proposed in the budget to eliminate source tax from the mentioned sectors, he added.
Generally, outward remittances are subject to a source tax of up to 30%.
Welcoming the move, Rupali Chowdhury, former president of the Foreign Investors Chamber of Commerce and Industry (FICCI) and managing director of Berger Paints Bangladesh Limited, told TBS, “The government is reducing indirect taxes. Eliminating tax at source on such outward remittances will reduce costs and streamline tax payment documentation.”
Who will benefit?
Thousands of students from Bangladesh pursue studies in various countries worldwide. A significant number have enrolled in universities and schools, particularly in neighbouring India, while others study across Europe, America, China, Malaysia, Japan, and Australia.
Moreover, the Bangladesh government makes payments to authorities in different countries for various purposes. Certified accountants, engineers, doctors, and professionals across various sectors and organisations in Bangladesh are members of international professional bodies. They need to send money to their organisations for various subscriptions, including annual fees.
Additionally, numerous organisations in Bangladesh operate liaison offices abroad, necessitating money for their operational expenses. Furthermore, businesses send money abroad for purposes such as product development, marketing, and security deposits.