If you’re engaged in freelance/outsourcing work in Bangladesh, chances are, you’ve heard of Payoneer. This American fintech company has been at the forefront of enabling online IT professionals in Bangladesh and surrounding countries to receive payments from international clients, spend on software and service online using the Payoneer debit card, and withdraw funds to their local bank accounts.
If you transfer your Payoneer earnings to your bank in Bangladesh, you will want to obtain a Remittance Certificate for tax purposes. In this article, we’ll find out why a Remittance Certificate is important and how to obtain one for Payoneer withdrawals in Bangladesh.
Why is Payoneer so popular in Bangladesh?
It’s not just because the service makes it super easy to get paid from clients nearly anywhere in the world that made Payoneer popular. It’s also because withdrawing funds from a Payoneer account to any bank in Bangladesh is effortless.
If you receive a wire transfer from an international client, banks will have you prepare a boatload of documents and make needlessly frequent visits to submit them.
Not only that, you have to do that every time you receive an international wire transfer.
Visiting a physical branch to have your earnings cleared every time you withdraw your money is a hassle no one wants, and that’s one of the reasons why companies like Payoneer and Wise are so popular, as they have allowed IT professionals to withdraw funds without any hassle.
What is a Remittance Certificate and why do you need it?
As you might already be aware, there is no income tax on ITES (IT-enabled services) in Bangladesh until 2024. So you will not pay taxes on your foreign freelance/outsourcing income. But you still need to submit a tax return. If you have an e-TIN, which you most likely do if you have a credit card or a car in your name, you must submit tax returns at the end of every financial year, even if the entirety of your income is tax-free.
But you need proof to show that your income was remitted to your bank account. The Remittance Certificate is proof that your income is indeed tax-free.
You may not have needed a remittance certificate yet if you haven’t submitted any tax returns, but as soon as you have an e-TIN in your name, you must submit a tax return on time, and the Remittance Certificate, along with other relevant documents, will be your proof of remittance.
Where to get a Remittance Certificate in Bangladesh
If you received direct wire transfers to your bank account, your bank will issue the remittance certificate for you. At the end of the financial year (June 30), you will need to visit your branch and submit a request to issue a remittance certificate for all the wire transfers to your account.
However, Payoneer transfers are not the same as receiving a wire transfer. Your bank is unlikely to issue a remittance certificate for your Payoneer withdrawals. That’s because there’s an intermediary bank that kind of ‘converts’ the funds you withdraw and transfers the money into your bank account in BDT.
As a result, your bank will see those Payoneer transfers as BDT transfers. There are notes that indicate them as foreign remittances (Usually denoted by “FR”), but because your bank didn’t do the conversion for you, they will refuse to issue remittance certificates for Payoneer transfers.
So, where do you go to get the remittance certificate? It’s that intermediary bank. For Payoneer, the intermediary bank is Bank Asia.
Bank Asia is responsible for handling the transfers you make from your Payoneer account to your bank account in Bangladesh. As such, only Bank Asia will issue a remittance certificate for your Payoneer withdrawals.
Documents Needed for Payoneer Remittance Certificate
Thankfully, you don’t need a boatload of documents to apply for a remittance certificate. You only need:
- A bank statement for the full financial year.
- A duly signed application form for the Payoneer Remittance Certificate to Bank Asia.
After obtaining the bank statement from your bank, you need to ‘annotate’ or ‘mark’ each Payoneer transfer. This helps Bank Asia locate the Payoneer transfers on your account as fast as possible. You can do this in two ways:
- On the printed statement, use a pen to highlight or annotate every Payoneer transfer between July 1 and June 30 (the full financial year).
- Alternatively, scan the statement and then use a tool on your computer to highlight them.
Application for a Remittance Certificate
The application for a remittance certificate is pretty straightforward. You can download the application template here and add the required details.
Applying for a Remittance Certificate at Bank Asia
When your annotated bank statement and the application are ready, you can apply online or visit Bank Asia’s head office.
If you prefer to apply in person, you’ll head to Bank Asia’s Purana Paltan office. Here’s the link to Google Maps. Once there, you can tell the receptionists that you’ll apply for a foreign remittance certificate, and they will guide you to the Foreign Remittance Department on one of the upper floors.
If you’re like me and prefer to do everything online, here are the steps:
- If you annotated your printed bank statement using a pen or a highlighter, take high-resolution pictures or scan them using a scanner. It’d help to ensure the bank statement is in one file.
- Get the application file here and fill it out. Save it as a PDF file.
- Attach those documents and send an email to all of these email addresses:
- Wait for them to get back!
How long does it take to get a Remittance Certificate from Bank Asia
Provided that all of the submitted documents are correct, and there are no issues on their end, you can expect to get the remittance certificate emailed to you within a week. I’ve gotten the remittance certificate via email as soon as three days.
Once you have the PDF copy of the remittance certificate, you can print and hand it over to your tax lawyer, who can submit it along with your bank statement and other files, proving that your earnings are tax-free.
Will foreign remittance remain tax-free beyond 2024 in Bangladesh?
I see no indication yet that the tax-free status of foreign remittance via ITES will be lifted after 2024. If the outsourcing income is taxed beginning in 2024, this article will no longer be relevant. But that’s the least of our worries, isn’t it?
Until then, I hope you found this article helpful! Please share it on social media, so others know how to get a remittance certificate from Bank Asia for their Payoneer withdrawals.