At present, Bangladesh is losing out on thousands of crores in lost revenue from foreign workers because of corruption and malpractice -- of the approximately 250,000 foreign workers in Bangladesh, earning around $4.5 billion per annum, only 90,000 can claim to be employed legally.
This means that only 90,000 employees can pay taxes while the rest continue to work for cash.
The situation is worsened by the fact that many amongst the ones legally employed reveal lesser amounts than their actual earnings, so that they have to pay lesser taxes on their income, which currently stands at 30%.
And this has resulted in around Tk26,400cr being remitted illegally out of the country, in addition to the fact that the National Board of Revenue is losing out on an estimated Tk12,000cr in taxes.
As long as corruption is not rooted out from this sector, this evasion of taxes will persist: The authorities must do a better job of keeping track of all the foreign workers who enter the country and ensure that getting a worker’s permit is easier and not buried under piles of bureaucratic red tape.
Currently, the system incentivizes illegal activity when it comes to the payment of taxes. Not only must law enforcement catch the ones getting away with undervaluing their income, the authorities must also keep in mind that a 30% tax on income acts as a disincentive for the payment of taxes.
At the end of the day, it all boils down to one thing: Regulation.
There are far too many informal sectors in our country that can benefit from formal regulation, and given that Bangladesh is increasingly becoming an attractive destination for foreign investors, it is not outside the bounds of reality to expect more foreign free agents to work here.
Open borders, when it comes to labour, should be welcome, as it not only allows for foreign expertise and talent to enter the nation, but also contributes to the economy in tremendous ways.
