Bangladesh: Huge tax lost for illegal foreign employees
DHAKA (The Daily Star/ANN) – Among 5 lakh foreigners working in various sectors in Bangladesh, only 1 lakh are registered and they are sending abroad over US$5 billion each year.
The government is losing millions of dollars a year in taxes from the foreign nationals who are working without taking any work permit in Bangladesh, according to Bangladesh Investment Development Authority (Bida).
It is mandatory for every foreigner to take prior permission from the state-owned investment promotion agency to serve any public and private company in Bangladesh.
But of late, different private and public entities have been found not complying with the rule, Bida said in a letter sent to every ministry, department and agency of the government and different trade bodies.
The Daily Star obtained a copy of the letter sent in the first week of August.
According to industry insiders, the country has around 5 lakh foreigners in different ministries, projects and private companies. But only 1 lakh of them have registered with Bida.
Every year, the foreigners send abroad over $5 billion, according to government agencies.
Different development projects of the government are recruiting skilled workers mainly from India, China, Sri Lanka, the Philippines, the UK and Germany.
Apart from government projects, the textile and garment sectors are the highest employers of foreign nationals in the private sector as Bangladesh needs a lot of experts in fashion and design, heavy machineries, merchandising, marketing and supply chain management.
“Recently, the number of illegal foreign workers have increased manifold,” said a senior official of Bida seeking anonymity.
“We are worried about it. That’s why we sent the letter to the ministries concerned and private companies for obtaining the work permits from Bida.”
Some contracting firms of the government’s development projects were also found recruiting foreign nationals without taking prior permission from Bida.
In some cases, the employers have been paying the foreign workers abroad in foreign currency although they are working here in Bangladesh, according to the letter.
As a result, the government is losing the income tax from the employees and it is also squeezing the job opportunities for domestic skilled workers and fresh university graduates, the letter also said.
Although many foreign employees have been drawing $10,000 and $12,000 as their monthly salary, they are showing their income in local currency mainly to evade tax, industry people also said.
Moreover, the illegal foreign workers do not pay the tax to the government although they earn a hefty amount per month.
Bida also sent a pattern for recruiting foreign nationals to the ministries, departments and agencies.
Bangladesh Economic Zones Authority (Beza) is one of the government recruiting agencies.
Different economic zones, both public and private, obtained work permits for some 1,000 foreign workers from the Beza so far, said Paban Chowdhury, its executive chairman.
“I do not allow any foreign worker to be recruited in any economic zone without obtaining the permission,” Chowdhury told The Daily Star.
Some local freight forwarding agencies recruited some 200 foreign nationals without any reason as the local institutions are capable of supplying the workforce in this sector, said an executive of a multinational company with operations in Bangladesh.
Some 25,000 graduates are coming out from different universities and institutes in this specialised sector, he said.
“For instance, Brac University, the AIUB, Bangladesh University of Professionals and IBA of the University of Dhaka are producing graduates in this subject.”
Moreover, the London-based Chartered Institute of Logistics and Transport and the Dhaka Chamber of Commerce and Industry are producing diploma graduates on logistics and freight forwarding.
“Then why do we need to recruit foreign nationals in this sector?” he asked.
Shafiul Islam Mohiuddin, the immediate past president of the Federation of Bangladesh Chambers of Commerce and Industry, said the companies want to recruit local graduates but sometimes they cannot deliver the services as per requirement.
“So, we depend on foreign nationals. We need to change the educational system so that we can produce an adequate number of skilled manpower,” Mohiuddin said.
“We have a lot of MBA degree-holders, but we need technical people -- those showcasing innovation and professionalism.”