Let me describe a transaction that happens hundreds of times every month in Dhaka.
A communications agency completes a campaign for a multinational client headquartered in London. The invoice is in US dollars. The client pays. The money arrives in Bangladesh through a formal banking channel.
And then the agency gives back somewhere between 25-30% of it -- in corporate tax, VAT, and advance income tax -- on earnings that, in any rational export policy framework, should be treated the same as a garment shipment.
Now let me describe what is increasingly happening instead. The same agency, or one of its competitors, sets up a company in Dubai's free zone or opens a corporate account in Singapore. The invoice goes out from there. The dollar stays there.
The agency principals draw a personal salary and bring money back to Bangladesh as individual remittances, which are exempt from tax.
Bangladesh gets a fraction of what it would have if the business had stayed onshore. The Bangladesh Bank gets nothing for its reserves. NBR collects no corporate tax.
This is not a hypothetical. I hear versions of this story from colleagues across the professional services sector every month. And I understand why it happens.
What I cannot understand is why our policymakers have not yet connected this behavioral reality to our ongoing foreign exchange challenge.
We are spending enormous political capital trying to stop dollars from leaving through the current account, while ignoring the policy changes that would make dollars flow in through the service account.
The policy blind spot
Bangladesh's foreign exchange incentive architecture was built in a different era, for a different economy. It is calibrated for three things: Garment exports, overseas worker remittances, and -- more recently -- ICT services.
Everything else is treated as a domestic economic activity, regardless of where the revenue comes from.
A PR firm that earns its revenue from multinational clients in Geneva and Tokyo is, for NBR's purposes, indistinguishable from one that serves only Bangladeshi companies.
A sourcing agent who facilitates the sale of Chinese machinery to Bangladeshi garment factories and earns a commission from the Chinese manufacturer is treated as a domestic trader.
An event company that produces activations for global brands across South Asia is assessed as a local service provider.
In each case, the dollar origin of the revenue is invisible to the tax code.
This is not a minor technical oversight. It is a structural misclassification with direct consequences for our reserve position.
What comparable countries did differently
India offers the most instructive parallel. In the 1990s, India faced reserve pressure, a narrow export base, and a growing professional services sector that was struggling under domestic tax treatment.
The government made a deliberate choice: Treat service exports as exports.
The Software Technology Parks of India scheme, and later the broader GST zero-rating for service exports, extended the same logic used for goods exports to professional and knowledge services. The result was an IT and professional services export sector that today generates over $250 billion annually -- one of India's three largest foreign exchange earners.
Bangladesh replicated the garment export incentive model with great success. It has never applied the same logic to services.
Pakistan, despite its well-documented fiscal difficulties, offers a more targeted lesson. Its Federal Board of Revenue introduced a final tax regime for service exports: A withholding tax of 1% collected at the point of inward remittance, constituting full discharge of tax liability on that income.
No corporate tax filing, no VAT reconciliation, no audit exposure. Pakistani technology and professional service firms responded by bringing more of their foreign earnings home -- because the cost of doing so dropped below the cost of keeping it offshore.
The Philippines built a $30bn business process outsourcing economy on a similar principle: If the revenue originates abroad and arrives in foreign currency, it is an export, and it is treated as one.
Sri Lanka learned the lesson in reverse -- its 2022 crisis was partly a consequence of years of offshore retention of service earnings, driven by unfavourable onshore conditions. The dollars existed. They were simply not in Sri Lanka.
Bangladesh is in the early stages of the same pattern.
Dubai and Singapore are not winning Bangladeshi business because they are better markets. They are winning because they do not penalize firms for earning foreign currency.
The revenue argument policy-makers need to hear
There is a predictable objection to preferential tax treatment for professional service exporters: That it reduces government revenue. This objection collapses when you consider the actual counterfactual.
Under the current framework, a large portion of professional service foreign earnings are never repatriated at all. NBR collects nothing on them. Bangladesh Bank receives no reserve support from them. The tax rate on offshore-retained earnings is effectively zero, because that income is structurally invisible to our tax system.
A final tax regime of even 3-5% on inward service remittances, applied to a fully compliant base, would generate more revenue than the current 27% rate applied to the fraction of firms that repatriate and comply.
If $1bn of currently-offshore professional service earnings were brought onshore under a simplified framework, NBR would collect $30-50m annually that it currently does not collect at all. Bangladesh Bank would gain $1bn in reserve-supporting inflows.
This is not a tax concession. It is a tax base expansion through rational incentive design.
What needs to change
The fix does not require a fundamental overhaul of our tax system. It requires four targeted changes.
First, establish a formal classification -- call it foreign-currency earning professional services, or FCEPS -- that recognizes communications, consulting, creative, sourcing, event, and advisory firms that earn in foreign currency as a distinct category of service exporter. Name it, define it, measure it.
Second, introduce a final withholding tax on inward foreign currency remittances to registered FCEPS firms, at a rate low enough to make formal repatriation cheaper than offshore retention. Three to five percent is a reasonable range. This replaces the current complex multi-layer burden with a single, clean, final discharge.
Third, operationalize the VAT zero-rating that already exists in law for service exports. Introduce a simplified input VAT recovery mechanism so that zero-rating is actually accessible, not merely nominally available.
Fourth, extend to FCEPS firms the foreign currency retention account framework currently available to goods exporters -- so that firms can hold a proportion of their earnings in hard currency without punitive conversion requirements.
None of these changes require new legislation to begin. Bangladesh Bank and NBR can move on most of them through circulars and administrative guidance. The political will is the binding constraint, not the institutional capacity.
A question of priorities
Bangladesh's finance ministry has, in successive budgets, expressed concern about reserve adequacy and the need to diversify export earnings.
Both concerns are legitimate. Both are directly addressed by a coherent policy framework for professional service exports.
The professional services sector is not asking for a subsidy. It is asking to be recognized as what it already is: An export industry. One that employs skilled Bangladeshis, requires minimal imported inputs, and earns foreign currency on merit in competitive global markets.
Right now, Bangladesh's professional service firms -- agencies, consultants, sourcing intermediaries, event companies -- are opening bank accounts in Singapore, Dubai, and Hong Kong. Not out of disloyalty. Out of rational self-interest. And our current tax framework is giving them no reason to do otherwise.
Every dollar that a Bangladeshi PR agency, consulting firm, or event company earns from an international client is the functional equivalent of a garment factory's FOB invoice. The only difference is that one has a forty-year policy framework behind it, and the other is invisible to the state.
We cannot rebuild our reserves by tightening import restrictions alone. We need to give dollar earners a reason to bring their dollars home. Right now, we are giving them every reason not to.
Manjeno Raihan Khan is the CEO and Co-founder of Concito, a strategic communications and public relations agency based in Dhaka. He writes in a personal capacity.
