How a foreign company hires and pays a contractor in Bangladesh
Sign a services contract that buys defined tasks, have the contractor invoice you, and send the payment by bank transfer to their account at a Bangladeshi bank that is an authorised dealer in foreign exchange. The bank checks the contract and invoice, credits the taka equivalent and lets the contractor keep part of it in US dollars.
With Toku as contractor of record, Toku contracts each contributor, collects their invoices and pays them, and your company buys the labeled data from Toku. The evidence your contractor's bank asks for comes from the same records.
| Question | Short answer for Bangladesh |
|---|---|
| Do we need a Bangladeshi entity? | No. You can contract an individual directly or through Toku. |
| Is freelance income taxed? | Freelancing income is exempt until 30 June 2027 if all of it arrives by bank transfer (Finance Act 2026). |
| How does the money arrive? | Through an authorised dealer bank, credited in taka with part kept in dollars (Bangladesh Bank, FEPD-1 Circular 22). |
| Can they be paid in crypto? | Bangladesh Bank prohibits virtual asset transactions, so Toku confirms the route for each person (FE Circular 24). |
Contractor or employee: the Labour Act line
The Bangladesh Labour Act 2006 defines a worker as a person employed in an establishment or industry, directly or through a contractor, for wages to do skilled, unskilled, manual, technical, business development or clerical work, whether the terms are express or implied (s.2(65), as substituted in 2026). There is no general presumption that a contractor is an employee, and the contract label does not decide it: what counts is whether the person is employed for wages.
The Labour (Amendment) Act 2026 extends trade union and industrial relations rights to self-employed workers and people engaged through digital labour platforms (s.175). That widens collective rights only. It does not make platform contractors employees for the rest of the Act.
- Pay per accepted task or deliverable, not a wage for time.
- Let contributors choose their tasks and hours, and work for other clients.
- Don't place contributors inside your establishment's staffing or discipline.
Tax registration, the freelancer exemption and the records you keep
Residents of Bangladesh are taxed on income from inside and outside the country (Income Tax Act 2023, s.26). They register for an e-TIN with the National Board of Revenue (s.261), and must file a return if their income is above the tax-free threshold or if they claim exempt income (s.166), so a freelancer claiming the exemption still files.
Income from listed IT and IT-enabled services is excluded from total income from 1 July 2024 to 30 June 2027 (Sixth Schedule, Part 1, para 21). Since 1 July 2026 the list reads "freelancing and content creation" (Finance Act 2026, s.157), and the exemption requires all income of the business to arrive 100% by bank transfer (Finance Act 2026, s.135). Freelancers' services are also VAT-exempt from 1 July 2026.
A foreign client with no presence in Bangladesh has no withholding role. The Bangladeshi bank that credits a remittance for services deducts 7.5%, unless the income is exempt under para 21 (s.124).
What you keep as the payer: the signed contract or statement of work, invoices, payment confirmations (such as SWIFT MT103 messages) and accepted-task records. These are the documents a Bangladeshi bank relies on to credit the payment. Toku keeps them for every contributor it contracts.
Payment rails, taka and Bangladesh Bank rules
Bangladesh Bank's freelancer circular (FEPD-1 No. 22, July 2026) lets freelancers receive payment from foreign clients through authorised dealer banks without export paperwork. The bank verifies electronic evidence such as the contract, invoices, emails and the remittance message, then credits the taka equivalent (paras 1-3). Remittances up to USD 20,000 need no Form-C, and above that an online Form-C is required (para 3(c)).
Freelancers can keep up to 50% of net earnings from software, data entry and processing and other ICT services in a US dollar retention quota (ERQ) account, and up to 30% for other services, with the rest converted to taka (para 6). Small payments can also arrive through recognised online payment gateways, up to USD 10,000 per transaction (para 4), and banks may issue dual-currency freelancer cards (para 5).
Keeping export proceeds abroad, including in virtual assets, breaches the Foreign Exchange Regulation Act 1947 (FEPD-1 Circular 26, Part H). Banks buy and sell foreign currency at freely negotiated rates (FEPD-2 Circular 09).
Paying contractors in Bangladesh in stablecoins
Toku can pay contributors in USDC or USDT, and in Bangladesh it confirms the route for each person before the first payout, because the central bank restricts crypto more tightly than most countries.
Bangladesh Bank treats virtual assets as neither currency nor approved foreign exchange under the Foreign Exchange Regulation Act 1947. Its FE Circular 24 (2022) says transactions in, from or to Bangladesh to obtain virtual assets are not permitted, and its October 2026 consolidated circular restates that the restriction remains in force. Bangladesh has no licensing regime for crypto service providers.
A bank payout in taka through an authorised dealer also keeps the freelancer tax exemption, which needs income to arrive by bank transfer. To plan the right mix for your contributors, talk to us about paying in stablecoins in Bangladesh.
Making the IP transfer valid in Bangladesh
Under the Copyright Act 2023, an assignment is valid only if it is signed by the assignor or their authorised representative (s.17(1)), in a deed that identifies the work and states the rights assigned, the duration and the territory (s.17(2)), and the royalty, advance or lump sum (s.17(3)). The deed of assignment is to be registered with the Copyright Office (s.16(6)).
Under the Information and Communication Technology Act 2006, an electronic record can satisfy a writing requirement (s.6) and an electronic signature affixed in the prescribed manner can satisfy a signature requirement (s.7). The Act's definition points to a signature uniquely linked to and controlled by the signer, so use a digital signature from a certifying authority licensed in Bangladesh, or wet ink, rather than a plain click.
- State worldwide and the full term: with no duration the assignment lasts five years, and with no territory it covers Bangladesh only (s.17(2)).
- Add a no-lapse clause: rights not used within one year lapse unless the deed says otherwise (s.17(4)).
- State the fee: a per-task lump sum works, but it must be in the deed (s.17(3)).
- Assign expressly: the Act gives first ownership to employers and, for some commissioned works such as IT-based digital works, to the person who commissioned them (s.15(2)), but whether that reaches labeled data is untested.
- Moral rights of authorship and integrity stay with the author (s.78), so the contract should say how the work may be edited and whether it is credited.
Pay data labelers in Bangladesh with Toku
Toku Contributor Payouts contracts each labeler in Bangladesh as contractor or agent of record, collects an IP assignment that meets Bangladeshi law and pays per accepted task through the bank channel the freelancer rules expect. You send task totals through the mass payouts API or a file, and every payout ties back to its contributor, agreement and tasks, which is the evidence the contractor's bank asks for.
Toku pays contractors in 100+ countries. Contractor management lists at $19 per contractor per month on the pricing page, and Contributor Payouts is priced on the contributors you actually pay. The API is documented at docs.toku.com.
General information for teams planning contributor programs. Classification, tax, payment eligibility, and data obligations depend on the actual arrangement and applicable local requirements.