A fresh wave of debate has swept through Bangladesh's rapidly growing digital economy following the government's announcement to drop a controversial 7.5% tax deduction at source on the foreign earnings of freelancers and content creators.
While the policy reversal has brought immense initial relief to the sector, persistent inconsistencies in banking practices and ambiguous administrative guidelines have triggered widespread confusion on the ground.
For months, independent digital professionals, software engineers, and online creators argued that a withholding tax on inward foreign remittances placed them at a severe disadvantage in the highly competitive global marketplace.
While the decision to scrap the levy is seen as a progressive step to encourage formal digital remittance inflows, its practical execution remains uneven.
Despite high-level policy declarations confirming the elimination of the tax, numerous freelancers have taken to social media to report that several commercial banks continue to automatically deduct 7.5% from incoming commercial remittances.
This discrepancy highlights a significant disconnect between central regulatory decisions and branch-level banking operations.
Adding another layer of complexity to the dispute, the National Board of Revenue (NBR) has distanced itself from the ongoing deductions, asserting that it never authorized a source tax on valid freelance earnings.
"There is absolutely no provision in our current tax regulations to deduct tax at source on the remittances sent by freelancers or expatriates. The information circulating about an official tax mandate on these specific inflows is entirely incorrect,” said Md Abdur Rahman Khan, chairman, NBR
The NBR’s stance has raised immediate counter-questions from financial analysts and IT professionals: if no such tax framework exists within the legal code, under what specific operational directives did commercial banks systematically deduct these funds from freelancer accounts in the past?
In response to the growing public backlash and the NBR's clarification, individual commercial institutions have begun modifying their protocols.
Dutch-Bangla Bank PLC issued a formal notice confirming that it has suspended all source tax deductions on IT-enabled freelance remittances.
Furthermore, internal sources from the bank indicated that they have initiated an automated process to credit back previously deducted tax amounts directly into affected client accounts.
Asked for an official directive to resolve the banking impasse, Bangladesh Bank deferred the matter entirely to the revenue authority.
Bangladesh Bank spokesperson and executive director Md Mezbaul Haque noted that all matters concerning tax structures, exemptions, and source deductions fall exclusively within the statutory jurisdiction of the NBR.
Haque explained that commercial banks generally execute or halt deductions based on explicit circulars issued by the revenue board.
Financial experts point out that the current friction is a direct byproduct of vaguely worded administrative notices, which leave room for conflicting interpretations between bank compliance officers and tax assessors.