How to pay international contractors in Bangladesh [2025]

Ranked as South Asia's second-largest economy, it’s no wonder global companies are looking to Bangladesh to enlist the services of Bangladeshi contractors. However, when it comes to paying them, what steps should you take to comply with Bangladesh's employment laws and taxation regulations?

Before you onboard your new Bangladeshi contractor, read on to learn how to properly categorize freelancers and compensate them in accordance with Bangladesh's labor laws. 

Step #1: Classify your workers in Bangladesh

The Labor Act of Bangladesh doesn't explicitly address how to differentiate employees from independent contractors. 

As a result, whether an individual is categorized as an employee or a contractor depends on common legal rules (like how much control they have, how payment happens, who owns the tools, and who decides the work hours).

Nevertheless, you still need to accurately classify your workforce to avoid misclassification issues.

In general, independent contractors are individuals who work on a per-project or task basis, typically maintaining a higher degree of control over their work and schedule. On the other hand, full-time employees are engaged in a more traditional employer-employee relationship, often with a set schedule and benefits provided by the employer. 

To help you decide how to classify your worker, here are a series of tests you can use:

Step #2: Determine the best way to pay your contractors in Bangladesh

The next step in paying contractors in Bangladesh is to determine a suitable payment method. 

In today's era of global workforces and remote operations, you have a wider array of choices for disbursing payments to Bangladeshi contractors. Here are several options to consider:

• Bank transfer: You can open a Bangladeshi bank account and use it to deposit funds directly into the accounts of Bangladeshi contractors. Or, you can use your own bank to initiate a global wire transfer for payment.

• International money orders: Although widely adopted, this method can be slow because it requires obtaining a physical money order. Additionally, the contractor must deposit the money order manually upon receiving it. Other drawbacks include possible fees and unfavorable exchange rates.

• Digital wallets or payment platforms: While some digital payment platforms are unavailable in Bangladesh (such as Venmo and PayPal), certain employers turn to platforms like Wise and Payoneer for cross-border money transfers. However, keep in mind that exchange rates tend to fluctuate, making it difficult to predict your outgoing expenses.

• Global payroll services: Contractors generally aren’t integrated into the payroll system, given that they aren't subject to the same withholdings as regular employees. Typically, they invoice for their services, and this process is managed through accounts payable for many companies. But with Rippling, you can streamline payments for Bangladeshi contractors, along with your global workforce, in a single system.

Step #3: Use global payroll software to process payments for Bangladeshi contractors 

As we described in Step #2, there are several ways to pay Bangladeshi contractors. But if you're looking for a fast and straightforward method, global payroll software is your best bet.

With Rippling, you have the capability to pay contractors worldwide, in a single system. Here's a glimpse into how Rippling's global payroll system works:

Step #4: Ensure your Bangladeshi contractor has the right tax information 

In Bangladesh, contractors handle their own tax filing and payments, relieving you of the responsibility for withholding and processing taxes. If your company is located in the United States, it's advisable to have your Bangladeshi contractors (as well as any other international contractors) complete an IRS W-8BEN, verifying their foreign contractor status for the US government.

Bangladesh's income tax rates range from 0 to 30 percent (depending on income and country of residence) so ensuring correct placement within the appropriate tax brackets is important. Here are the guidelines for contractors filing their taxes in Bangladesh:

1. Get an e-TIN (Tax Identification Number): Contractors should complete and submit an application form at the official website to their local tax office in order to receive an electronic TIN number. They should include their existing 12-digit TIN and National/Corporate ID Card. 

2. Set up an online account: Upon successful registration, the tax office will provide them with an online account certificate containing their username and password, which they will use to file their taxes.

3. File taxes: Contractors can then file taxes by filling out the relevant forms and inputting their personal data, such as National ID Number, TIN, and family members' names.

Effortlessly manage contractors around the world

It's never been easier to expand your global workforce. With Rippling, you can pay international contractors in Bangladesh and around the world in one system.

Frequently asked questions about running payroll for contractors in Bangladesh