Professional Employment (Employer of Record) in Bangladesh

Professional employment is often the fastest lawful way to put a skilled person to work in Bangladesh. A foreign software company wants a business development manager in Dhaka; an international NGO needs a project accountant before its registration with the NGO Affairs Bureau is complete; a local group wants specialists for a two-year project without adding them to its own headcount.

In each case, someone in Bangladesh must be the legal employer. This page explains how an employer-of-record style arrangement works, what it can and cannot do, and how it compares with registering your own entity or using independent contractors. For supply of operational contract labour, see our contractual staffing page.

How professional employment works

You identify the person, or we help you find them. The Bangladesh employing entity issues the appointment letter, registers the person on its payroll, pays salary monthly, deducts tax at source, provides statutory leave and benefits, and handles any separation in line with the law and the contract. You agree the role, salary and objectives, and direct the person's work under a service agreement with the employing entity, which invoices you for salary cost plus a service fee.

Because the person is a genuine employee of a Bangladesh entity, they receive proper payslips, tax certificates and employment records, which matter for bank loans, visas and their own tax returns.

Who professional employment is for

• Foreign companies testing Bangladesh before setting up a subsidiary or branch
• International organisations awaiting registration or approval
• Local businesses needing project staff outside their own headcount
• Companies converting long-term contractors into proper employees
• Firms needing a short bridge while their own entity is incorporated through RJSC

Compliance points the arrangement must respect

The employing entity must comply with the Bangladesh Labour Act 2006 and Labour Rules 2015 where the professional is a worker, and with the contract in all cases. If the arrangement involves supplying workers to a client, outsourcing registration under Section 3A of the Act must be considered. The service fee is subject to VAT under the VAT and Supplementary Duty Act 2012, and a Bangladesh client that is a withholding entity must deduct VAT and income tax at source on the invoice.

For foreign clients, payment for services to a Bangladesh entity is received through banking channels as export of services, documented under Bangladesh Bank's foreign exchange rules.

Limits you should know about

An employer-of-record style arrangement does not eliminate permanent establishment risk for a foreign client. If the professional habitually concludes contracts in the client's name, or effectively runs a fixed place of business for it, the foreign company may still have a taxable presence in Bangladesh. It also cannot sponsor a work permit for a foreign national on the client's behalf; expatriates need an employer registered with BIDA, BEZA, BEPZA or the NGO Affairs Bureau as relevant, and the employer must actually employ them.

When a team grows beyond a handful of people, or the business starts trading locally, a subsidiary or branch is usually the better long-term structure.

Professional employment vs alternatives

• Independent contractor: simple, but risky if the person works like an employee
• Professional employment: proper employment without your own entity
• Liaison office: can employ staff but cannot earn revenue locally
• Subsidiary or branch: full control and trading, with higher set-up and compliance cost

How the process works

1. Scope the roleWe confirm the role, location, salary, benefits and expected duration with you.
2. Check the structureWe review permanent establishment and classification risks and confirm the arrangement is suitable.
3. Sign the service agreementA service agreement sets out fees, responsibilities, confidentiality and intellectual property.
4. Employ the professionalThe employing entity issues the appointment letter, collects documents and onboards the person.
5. Monthly payroll and invoicingSalary is paid with tax deducted, and you receive an invoice with supporting payroll summary.
6. Transition or exitWhen you set up your own entity, we help transfer the employee; otherwise we manage a lawful exit.

Typical timeline: Once the candidate is identified, professional employment can usually begin within one to three weeks, depending on agreement signing, document collection and the start of the next payroll cycle.

How Tax & VAT Associates helps

• Legal employment of your chosen professionals in Bangladesh
• Labour Act-compliant contracts, leave and benefits
• Monthly payroll with salary TDS and tax certificates
• Service agreement covering confidentiality and IP assignment
• Permanent establishment and structure review for foreign clients
• Transfer of employees to your own entity when you are ready

Frequently asked questions

Related services

Last reviewed: 6 October 2026. Bangladesh tax and regulatory rules change with each Finance Act, SRO and authority circular. This page is general guidance; confirm current requirements for your case before filing.