The non-resident tax deduction rate in Bangladesh determines how much tax a payer must withhold before sending money to a non-resident individual or entity. Under Section 119 of the Income Tax Act, any resident person or their authorized agent who pays income to a non-resident must deduct or collect tax at source, according to the rates fixed in the TDS rules 2026. This rule applies to a wide range of payments, from professional fees to royalties and dividends.
If you run a business, manage payroll, or handle vendor payments involving foreign parties, understanding the non-resident tax deduction rate is essential for staying compliant. This guide breaks down the full rate table, explains who is affected, and lists the payments that are exempt from deduction.
What is the Non-Resident Tax Deduction Rate Under Section 119?
Section 119 of the Income Tax Act requires that whenever a specified person or a responsible officer makes a payment to a non-resident, and that payment is taxable in Bangladesh, the payer must deduct or collect tax before releasing the funds. The non-resident tax deduction rate varies depending on the nature of the service or transaction, and it is set out in a detailed schedule attached to the rules.
This means the payer, not the non-resident recipient, carries the legal responsibility for withholding the correct amount. If the payer fails to deduct tax at the applicable rate, they may become personally liable for the shortfall.
Full Table of Non-Resident Tax Deduction Rates 26-27
The TDS rules 2026 lists thirty categories of payment, each with its own non-resident tax deduction rate. The table below summarizes every category from the official schedule.
| SL No. | Nature of Payment | Deduction Rate |
|---|---|---|
| 1 | Advisory or consultancy fee (natural person) | 20% |
| 1 | Advisory or consultancy fee (other than natural person) | 10% |
| 2 | Pre-shipment inspection fee | 20% |
| 3 | Professional service fee (natural person) | 20% |
| 3 | Professional service fee (other than natural person) | 10% |
| 4 | Technical service / technical know-how or technical assistance fee (natural person) | 20% |
| 4 | Technical service / technical know-how or technical assistance fee (other than natural person) | 10% |
| 5 | Architecture, interior design, landscape design, fashion design or process design fee | 15% |
| 6 | Certification, rating and similar fees | 15% |
| 7 | Satellite, airtime or frequency use rent, or channel broadcast rent | 20% |
| 8 | Legal service fee | 20% |
| 9 | Management service bill, including outsourced management | 20% |
| 10 | Commission | 15% |
| 11 | Royalty, license fee, or payment for similar property | 20% |
| 12 | Interest payment | 10% |
| 13 | Advertisement broadcasting bill | 15% |
| 14 | Advertisement production and digital marketing bill | 10% |
| 15 | Sea or air transport bill (except cases under Sections 259 and 260) | 6% |
| 16 | Contractor, sub-contractor and manufacturer payment for processing, conversion, construction, engineering, or similar work | 6% |
| 17 | Supply of goods bill | 6% |
| 18 | Capital gains | 15% |
| 19 | Insurance premium fee | 5% |
| 20 | Machinery, equipment, and similar rent bill | 7.5% |
| 21 | Dividend (received by a company, fund, or trust) | 20% |
| 21 | Dividend (received by any other person) | 25% |
| 22 | Money received by an artist, singer, or athlete | 30% |
| 23 | Salary or remuneration bill | 30% |
| 24 | Petroleum operation exploration or drilling | 5.25% |
| 25 | Survey for coal, oil, or gas exploration | 15% |
| 26 | General insurance company surveyor fee | 5.25% |
| 27 | Service for connecting an oil or gas field with its terminal delivery point | 5.25% |
| 28 | Bandwidth payment bill | 10% |
| 29 | Courier service bill | 10% |
| 30 | Any other payment | 20% |
Payments Exempt From the Non-Resident Tax Deduction Rate
Not every cross-border payment is subject to withholding. According to sub-rule (3) of Rule 5, the following payments are excluded from the non-resident tax deduction rate requirement:
- Payments made to a foreign government authority
- Subscription fees paid to an internationally recognized professional body
- Liaison office or branch office expenses
- Tuition fees verified by an authorized dealer according to Bangladesh Bank’s Guidelines for Foreign Exchange Transactions
- International marketing expenses and product development expenses
- Any type of security deposit
- Arbitration fees
- Money remitted for Hajj purposes
- Money paid for a required pass
These exemptions matter because businesses often assume every foreign payment triggers withholding, which is not accurate. Knowing this list can prevent unnecessary over-deduction and compliance disputes.
Who is Responsible for Applying the Non-Resident Tax Deduction Rate?
The Income Tax Act places the deduction duty on the person or entity making the payment, not on the non-resident receiving it. If a resident business hires a foreign consultant, pays a foreign supplier, or remits a royalty abroad, that resident business must apply the correct non-resident tax deduction rate before transferring funds. Experts generally advise that finance teams maintain a checklist mapped to the TDS rules schedule so payments are classified correctly before disbursement.
If the payer is not personally liable to pay the tax as an agent, they must still deduct or collect tax at the rate shown in the table. Failure to apply the correct rate can expose the payer to penalties and interest.
How to Get a Lower or Zero Deduction Certificate
Where a non-resident believes the standard non-resident tax deduction rate does not reflect their actual tax liability, they can apply to the Board. Upon receiving a proper application with supporting documents, the Board must decide within 30 days whether the payer should deduct tax at a reduced rate, at no rate, or should proceed with the standard rate under sub-rule (1). This process gives genuine relief to non-residents whose income may already be exempt or taxed under a treaty.
Frequently Asked Questions
What is the non-resident tax deduction rate for professional service fees?
Professional service fees paid to a non-resident natural person are taxed at 20%, while payments to other types of non-resident entities are taxed at 10%.
Are any payments exempt from the non-resident tax deduction rate?
Yes. Payments such as security deposits, arbitration fees, Hajj remittances, and verified tuition fees are exempt under Rule 5(3).
Who must apply the non-resident tax deduction rate?
The resident payer, or their authorized agent, is legally responsible for deducting tax at the correct rate before making the payment.
Can a non-resident request a lower deduction rate?
Yes. A non-resident can apply to the Board, which must respond within 30 days regarding whether a reduced or zero rate applies to their case.
Final Thoughts
Understanding the correct non-resident tax deduction rate protects businesses from compliance risk and helps non-residents plan their cross-border payments accurately. Since rates differ widely across the categories listed in the table, from 5% on insurance premiums to 30% on salaries and artist fees, payers should always check the latest gazette schedule before releasing funds. When in doubt, consulting a tax professional or applying to the Board for a rate determination is the safest path forward.