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Contractor of Record in Bangladesh
Engage and pay Bangladeshi contractors through Aniday's partner entity in Bangladesh
Under a Contractor of Record (COR) arrangement, Aniday's partner entity in Bangladesh becomes the contracting party with your independent contractor. We run the classification check against the Labour Act "worker" test, sign a compliant contract for service, deduct and deposit the tax at source a Bangladeshi payer owes, collect the TIN and IP paperwork, and pay in taka — while your contractor keeps working directly with your team. You get the talent without a Bangladesh entity, and without the misclassification risk sitting on your books.
Not sure whether the role is a contractor or an employee? Compare with Employer of Record in Bangladesh for full-time hires — we tell you which one applies before you sign anything.
Bangladesh's Employment Snapshot
What is a Contractor of Record in Bangladesh?
The Bangladesh Labour Act 2006 protects "workers" — and the Labour (Amendment) Act 2026 widened that word to any person employed in an establishment in any capacity. An independent contractor sits outside it, under the Contract Act 1872, and the courts decide which side of the line a person falls on by looking at control and supervision. A Contractor of Record is a Bangladeshi company — Aniday's partner entity in Bangladesh — that signs the contract for service with the contractor on your behalf, so the contractor is engaged by a local counterparty that deducts the right tax at source, keeps the records the National Board of Revenue expects, and carries the classification liability.
COR is the right fit for genuinely independent work: project-based developers, part-time advisers, fractional roles and consultants who set their own hours and serve other clients. If the role is full-time, supervised and permanent, it is employment — use Employer of Record in Bangladesh instead. We tell you which one applies before you sign anything.
Aniday in Bangladesh — through our in-country partner entity
Our Address: Dhaka, Bangladesh
(contracting party, payer, tax deductor, compliance owner)
What Aniday's Contractor of Record covers in Bangladesh
Everything between "we found the person" and "the person has been paid, on time, with the right paperwork".
Classification check against the Labour Act "worker" test
Before onboarding we assess who controls and supervises the work, whether the person is treated like staff, who bears the economic risk and whether they serve other clients — the factors Bangladeshi courts weigh. If the answer is "worker", we say so and route the role to EOR.
A compliant contract for service, signed by our Bangladesh partner entity
Scope, deliverables, fees, confidentiality, non-exclusivity and a written IP assignment — because under the Copyright Act 2023 a commissioning party only owns the work if the contract says so.
Invoicing and payment in BDT, one invoice to you
One invoice from Aniday to you in USD or SGD; BEFTN or RTGS transfer in taka to the contractor on the agreed cycle. The contractor never has to deal with Form C declarations, bank remittance deductions or Bangladesh Bank repatriation rules, because the payment is domestic.
Tax deducted at source, deposited and certified
A Bangladeshi payer must deduct tax at source on professional, consultancy and technical fees paid to an individual (15% under section 90 of the Income Tax Act 2023, higher without proof of return filing). Our partner entity deducts it, deposits it and issues the certificate, so the contractor gets full credit on their own return.
Misclassification liability sits with Aniday
If a contractor engaged under our COR is later found to be a worker, the retroactive Labour Act entitlements — gratuity, leave, festival bonus, notice — are our problem to resolve, not yours. That is what the fee pays for.
Convert to an employee when the role grows
When a contractor becomes full-time, we move them onto an employment contract under our Bangladesh EOR with Labour Act leave, festival bonuses and provident fund where applicable — same contact, same platform.
Contractor rules in Bangladesh at a glance
The facts that decide whether a contractor engagement in Bangladesh is clean. All figures are the current rules as of September 2026; sources are listed below the table.
| Topic | Bangladesh rule |
|---|---|
| Employee vs contractor | The Labour Act 2006 applies to "workers"; the Labour (Amendment) Act 2026 (in force 10 April 2026) defines a worker as any person employed in an establishment in any capacity, with narrow exceptions for designated managers. Independent contractors are governed by the Contract Act 1872. There is no statutory contractor test — courts look at control and supervision, and can apply the Labour Act retroactively if the label does not match the reality. |
| Who can be a contractor | Bangladeshi residents with a Taxpayer Identification Number (e-TIN). Foreign nationals need a work permit from BIDA tied to an employer; for them the route is EOR with a work visa. |
| Income tax | Income Tax Act 2023. The tax-free threshold is Tk 400,000 for FY2026-27 (higher for women, people over 65 and persons with disabilities), then progressive slabs from 10% to 30%. Income earned by registered ITES businesses is exempt until 30 June 2027 if received through banking channels, and the FY2026-27 budget exempted freelancer income more broadly — the contractor's own return decides what applies. |
| Withholding on the payer | A Bangladeshi payer deducts tax at source on advisory, professional and technical fees paid to an individual at 15% (section 90, Income Tax Act 2023); the rate rises by 50% if the contractor cannot show proof of return submission. A foreign payer with no Bangladesh presence does not deduct — but the receiving bank may deduct under section 124 on inward remittances for services, a practice that has been inconsistent in 2026. Under COR our partner entity is the deductor and issues the certificate. |
| VAT | 15% standard rate under the VAT and Supplementary Duty Act 2012. Registration is compulsory once annual turnover exceeds Tk 50 lakh; turnover between Tk 30 lakh and Tk 50 lakh is enlisted for turnover tax instead. Exported services are zero-rated; the FY2026-27 budget also exempted freelancer and content-creator services from VAT. Most solo contractors are below the threshold. |
| Social security | No contributory social-security scheme for self-employed people, and no employer provident fund for contractors. The Universal Pension Scheme (2023) has a scheme open to self-employed participants on a voluntary basis. Everything else is private insurance. |
| Intellectual property | Copyright Act 2023: the author is first owner. An employer owns work created under a contract of employment unless agreed otherwise, but a commissioning party owns a contractor's work only if the contract says so. A written assignment is essential — Aniday's contract includes one that flows the rights to you. |
| Invoicing | No prescribed format for unregistered persons; VAT-registered contractors issue a Mushak 6.3 tax invoice with their BIN. Contractors who invoice foreign clients directly need the remittance to arrive through a bank, Payoneer or a licensed MFS channel and, above set limits, a Form C declaration. Under COR the contractor invoices our Bangladesh entity in taka and none of that applies. |
| Currency and payment | The taka is not freely convertible; the Foreign Exchange Regulation Act 1947 and Bangladesh Bank rules govern inflows. Direct payment from abroad arrives by SWIFT, Payoneer (with bKash withdrawal) or Wise; PayPal is not available. Service exporters may retain part of their proceeds in a foreign- currency retention account. Under COR the contractor is paid in taka by BEFTN or RTGS from our partner entity; you pay one Aniday invoice in USD or SGD. |
| Data protection | Personal Data Protection Act 2026 (Act 63 of 2026), enacted in April 2026 after the Personal Data Protection Ordinance 2025 (promulgated 6 November 2025) and its 2026 amendment. It is administered by the National Data Management Authority. Aniday's partner entity is the data controller for contractor data it collects. |
| If it goes wrong | Reclassification means the Labour Act applies retroactively — gratuity, annual and festival leave, festival bonuses, notice and compensation — and a Labour Court claim. A foreign company also risks a "dependent agent" permanent establishment under Bangladesh's tax treaties if a contractor habitually concludes contracts on its behalf. |
Sources. Income Tax Act 2023 (sections 90 and 124), Finance Act 2026 thresholds and VAT and Supplementary Duty Act 2012 thresholds from the National Board of Revenue; foreign exchange and inward-remittance rules from Bangladesh Bank; Labour Act 2006 and the Labour (Amendment) Act 2026 from the Ministry of Labour and Employment; Copyright Act 2023 from the Bangladesh Copyright Office; VAT thresholds cross-checked against PwC Tax Summaries. Last verified 2026-09.
How Contractor of Record works in Bangladesh
Three steps take you from "we want to engage this person" to the contractor's first payment.
Status check and contract
We test scope, hours, supervision and exclusivity against the Labour Act "worker" test to confirm COR is the right vehicle, then Aniday's partner entity in Bangladesh signs the contract for service with the contractor covering deliverables, fees, confidentiality, written IP assignment, data-handling and termination terms.
Onboarding and paperwork
We onboard the contractor: NID-based identity check, e-TIN with proof of return submission, VAT status and bank details, all filed into a compliance pack you can hand to your auditors.
Work, invoicing and payment
The contractor works with your team, and approved invoices or timesheets roll into a single Aniday invoice to you. The contractor is paid in taka on the agreed cycle, tax at source is deposited and certified, and payment records are kept for the NBR and for you.
COR, EOR or contractor management software — which one in Bangladesh?
| Contractor of Record | Employer of Record | Contractor management software | |
|---|---|---|---|
| Who is the counterparty | Aniday's partner entity in Bangladesh contracts with the contractor | Aniday's partner entity in Bangladesh employs the person | You contract directly from abroad; the tool only handles documents and payouts |
| Best for | Project work, part-time specialists, advisers, fractional roles | Full-time, supervised, ongoing roles | Companies that already have counsel, an entity or a risk appetite for classification |
| Classification risk | Assessed by Aniday; liability carried by Aniday | None — the person is an employee | Stays with you |
| Tax at source, leave, gratuity | Tax at source deducted and certified by our partner entity; no Labour Act benefits for contractors | Labour Act leave, festival bonuses, gratuity and salary tax handled | No deduction by you; contractor faces bank remittance deductions and files alone |
| Convert later | Contractor → EOR employee in days | — | Manual |
🇧🇩 FAQs about Contractor of Record in Bangladesh
Can I hire a contractor in Bangladesh without a local company?
Yes. A foreign company can contract directly with a Bangladeshi resident. You do not deduct tax, but the contractor's bank may deduct at source on the inward remittance, the contractor has to manage Bangladesh Bank paperwork alone, and you carry the classification, IP and PE exposure. Under Aniday's Contractor of Record, Aniday's partner entity in Bangladesh is the contracting party, so you need no local entity and the compliance sits with a Bangladeshi company.
Is tax deducted when the contractor is paid?
Yes, because the payer is a Bangladeshi entity. Section 90 of the Income Tax Act 2023 requires 15% to be deducted from advisory, professional and technical fees paid to an individual, and the rate goes up by half if the contractor cannot show proof of return submission. The deduction is deposited against the contractor's TIN and certified, so it is a credit on their own return — and a contractor whose income is exempt (for example registered ITES income until June 2027) claims the exemption there.
Isn't freelance income in Bangladesh tax-free?
Partly. Income of registered IT-enabled-services businesses with a trade licence, TIN and BIN is exempt until 30 June 2027 if it arrives through banking channels, and the FY2026-27 budget extended a tax and VAT exemption to freelancers and content creators. The exemption is claimed on the contractor's own return; it does not switch off deduction at source by a domestic payer. Banks have also applied deductions on inward remittances inconsistently during 2026 — one more reason a domestic payment through COR is cleaner.
Who owns the work my Bangladeshi contractor produces?
Without a written assignment, the contractor does. Under the Copyright Act 2023 the author is the first owner; an employer takes ownership of employee work by default, but a commissioning party owns a contractor's work only where the agreement says so. Aniday's contract for service includes an assignment of IP to you and a licence for the contractor's pre-existing materials, so ownership is settled before the first deliverable.
What happens if the contractor is found to be a worker?
The Labour Act applies retroactively: gratuity, annual and festival leave, festival bonuses, notice and compensation, enforced through the Labour Court. The 2026 amendment's wide "worker" definition makes that outcome more likely for anyone who is in practice supervised like staff. Under our COR that exposure sits with Aniday's partner entity as the contracting party — and our classification assessment is designed to stop the engagement being set up that way in the first place.
Does the contractor need to register for VAT?
Only once annual turnover exceeds Tk 50 lakh, which most individual contractors do not reach; turnover between Tk 30 lakh and Tk 50 lakh is enlisted for turnover tax instead. A VAT-registered contractor invoices our partner entity with 15% VAT on a Mushak 6.3 invoice, which we handle. We track each contractor's VAT status so invoices are right.
How is the contractor paid, and how fast can Aniday set one up in Bangladesh?
In taka, by BEFTN or RTGS from our Bangladesh partner entity, net of tax at source, on the cycle set in the contract — monthly is standard, milestone-based is common for project work. You pay one Aniday invoice in USD or SGD. Set-up typically takes 3–7 business days from the classification assessment to a signed contract, provided the contractor's NID, e-TIN and bank details are ready.
Client Reviews
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