How to pay and manage Bangladeshi contractors: A practical guide
Complete guide to paying contractors in Bangladesh: Wise vs PayPal fees, TIN requirements, NBR compliance, currency considerations (USD vs BDT), and contractor management tools.
If you're paying independent contractors in Bangladesh, you need to handle payment carefully and understand local payment restrictions. The payment part requires specific knowledge of what works in Bangladesh. The compliance part—understanding TIN requirements, currency preferences, and PayPal limitations—is where most foreign businesses make mistakes.
This guide walks through what you actually need to do. Then we'll show you where Kontrable helps organize the work.
The main things you need to do
1. Use Wise or Payoneer for payments. These are the only reliable payment methods for Bangladeshi contractors. Wise costs $3-10 per transfer with real mid-market exchange rates. Payoneer costs $5-12 and is very popular in Bangladesh. PayPal is restricted—contractors can receive payments but face difficulties withdrawing funds, so avoid it. Traditional bank transfers cost $20-40 and take 3-7 days.
2. Always pay in USD. Bangladeshi contractors almost universally prefer USD for stability and international purchasing power. The Bangladeshi taka (BDT) can devalue, and contractors want certainty on what they're earning. Always confirm currency preference before setting up payments, but expect USD.
3. Verify TIN before starting work. TIN (Taxpayer Identification Number) is Bangladesh's tax identification number issued by the NBR (National Board of Revenue). Always verify the contractor has a valid TIN before the first payment.
4. Use a written contract. Document the contractor relationship with a clear service agreement covering scope, deliverables, payment terms, currency (USD), IP ownership, confidentiality, and explicit statement that they're an independent contractor (not an employee).
5. Keep payment records. Maintain documentation of all payments made. As a foreign company, you typically don't withhold Bangladeshi taxes, but you need records for your own country's tax compliance.
That's the foundation. Everything else builds on these five things.
Payment methods: What actually works
For paying Bangladeshi contractors:
Use Wise or Payoneer. These are the two reliable payment methods in Bangladesh.
Wise: It charges $3-10 per transfer with real mid-market exchange rates—no markup. Transfers take 1-3 business days. Contractors can withdraw to local Bangladeshi bank accounts. Wise is widely accepted.
How to set up: Create a Wise business account (free). Get the contractor's bank details (account number, bank name, SWIFT code). Send USD to their account. The contractor receives money in 1-3 business days and can withdraw to their local bank.
Payoneer: It charges $5-12 per transfer and is very popular with Bangladeshi freelancers. Many Bangladeshi contractors already have Payoneer accounts. Transfers take 1-3 business days. Contractors can withdraw to local bank accounts.
How to set up: Create a Payoneer business account (free). Get the contractor's Payoneer account email. Send USD to their account. They can withdraw to their Bangladeshi bank account.
What about PayPal?
PayPal is restricted in Bangladesh. Contractors can technically receive payments, but they face serious difficulties withdrawing funds from their PayPal accounts to local banks. Avoid PayPal for Bangladesh. Use Wise or Payoneer instead.
What about traditional bank transfers?
Avoid them. They cost $20-40 per transaction and take 3-7 days. Use Wise or Payoneer instead.
Currency: Always USD
Bangladeshi contractors almost universally prefer USD for stability and international purchasing power. The Bangladeshi taka (BDT) can devalue, and contractors want certainty on what they're earning.
Tech workers especially prefer USD because they're paid by international clients and need stability. USD also has better long-term purchasing power than BDT.
Always confirm currency preference with your contractor before setting up payments, but expect them to say USD. If they request BDT, ask why and explain the currency risk. Most will prefer USD.
Understanding TIN (Tax ID)
TIN (Taxpayer Identification Number) is Bangladesh's tax identification number issued by the NBR (National Board of Revenue). All contractors must have one to operate legally in Bangladesh.
You need to verify the contractor has a valid TIN before starting work. Ask them to provide their TIN and keep it on file. This is the contractor's responsibility to obtain and maintain, but you should verify it as part of your contractor onboarding process.
Tax and compliance requirements
When hiring contractors in Bangladesh, tax obligations are straightforward: the contractor is responsible for their own taxes with the NBR (National Board of Revenue). You don't withhold taxes or file anything with Bangladeshi tax authorities.
Your responsibilities: Verify the contractor has a valid TIN. Have a clear written service contract. Keep documentation of all payments. Don't withhold Bangladeshi taxes. Ensure proper contractor relationship (they control their work, use their own tools, work for multiple clients, are project-based).
Contractor's responsibilities: They handle their own tax compliance with the NBR. They register and maintain their TIN. They file tax returns as required by Bangladeshi law. They keep records of income and expenses.
Important note: As a foreign company paying a Bangladeshi contractor, you typically don't have tax withholding obligations in Bangladesh. The contractor handles their own NBR tax compliance. Consult with a tax professional in your country about reporting requirements in your jurisdiction.
Contractor vs employee classification
One mistake businesses make is treating contractors like employees. Bangladesh has labor laws that distinguish between the two, and misclassification can create legal risk.
A proper independent contractor relationship means they control how work is done, use their own tools and equipment, work for multiple clients, and are engaged on a project basis with defined deliverables. They shouldn't have set working hours, provided equipment, exclusive work requirements, or ongoing employment-like arrangements.
Document the relationship carefully with a written contract that explicitly states independent contractor status.
Why hire Bangladeshi contractors?
Bangladesh has a rapidly growing tech and outsourcing sector with excellent advantages. The country has skilled developers and growing tech talent. Rates are 40-60% lower than Western countries while maintaining quality. The workforce is dedicated and motivated. English proficiency is growing in the tech sector—many contractors speak English well enough for international work. Bangladesh has an expanding startup ecosystem and growing IT industry.
Common mistakes and how to avoid them
Mistake 1: Trying to use PayPal. You attempt to pay via PayPal thinking it works everywhere. The contractor receives the payment but can't withdraw it from their PayPal account to their Bangladeshi bank. Frustration and confusion result.
Solution: Use Wise or Payoneer instead. Both are designed to work in Bangladesh and contractors can easily withdraw to local banks.
Mistake 2: Paying in BDT. You pay in Bangladeshi taka assuming it's simpler for the contractor. They lose value due to currency devaluation and are unhappy about it.
Solution: Always pay in USD. Almost all Bangladeshi contractors prefer USD. Have the conversation upfront about currency.
Mistake 3: Not verifying TIN. You hire a contractor without requesting their TIN. They may not be properly registered with the NBR, creating potential compliance issues.
Solution: Request TIN before the first payment. Keep it on file as proof of contractor tax registration.
Mistake 4: No written contract. Verbal agreements lead to disputes about scope, deliverables, and payment terms. Without documentation, there's no clarity when disagreements arise.
Solution: Always have a written service agreement before starting work. Cover scope, deliverables, payment terms, currency (USD), IP ownership, confidentiality, and termination terms.
Mistake 5: Misclassifying employees as contractors. You treat a contractor like an employee—setting hours, providing equipment, requiring exclusive work. This creates legal risk.
Solution: Ensure true contractor relationship. They control how work is done, use their own tools, work for multiple clients. Document this in the contract.
Frequently asked questions
Q: Can I use PayPal to pay Bangladeshi contractors? A: PayPal is restricted in Bangladesh. While contractors can receive payments, they face serious difficulties withdrawing funds to their local banks. Use Wise or Payoneer instead.
Q: Should I pay in USD or BDT? A: Almost all Bangladeshi contractors prefer USD for stability and international purchasing power. Always confirm with your contractor, but expect USD.
Q: What's the best payment method for Bangladesh? A: Wise and Payoneer are both excellent. Wise typically has lower fees ($3-10), while Payoneer is very popular among Bangladeshi freelancers and many already have accounts.
Q: Do I need an EOR platform for Bangladeshi contractors? A: No. EOR is for hiring employees internationally. Bangladeshi contractors handle their own NBR tax compliance. You just need a good payment method (Wise or Payoneer) and the ability to organize contracts and payment records.
Q: Do I need to withhold Bangladeshi taxes? A: No. As a foreign company paying a Bangladeshi contractor, you typically don't withhold Bangladeshi taxes. The contractor is responsible for their own NBR tax compliance.
Q: Do I need a local presence or business registration in Bangladesh? A: No. You're paying independent contractors for services. You don't need a Bangladeshi business entity, registration, or tax ID. The contractor handles their own compliance.
Q: What should be in a contractor agreement for Bangladesh? A: Include scope of work, deliverables, payment terms, currency (USD), independent contractor status, IP ownership, confidentiality, and termination terms. A simple written agreement protects both sides.
Getting started
If you're paying Bangladeshi contractors, here's the process:
- Verify contractor has valid TIN
- Set up Wise or Payoneer business account (Wise typically has lower fees)
- Confirm currency preference (will likely be USD)
- Get contractor's payment details (bank account for Wise, Payoneer email for Payoneer)
- Create written service agreement
- Set up regular payment schedule
- Keep records for your tax purposes
- Maintain contractor contact and documentation
Kontrable helps with steps 2, 4, 5, 6, 7, and 8 by organizing contractor information, tracking payments, managing contracts, and storing invoices. You stay in control of your payment method and use Wise or Payoneer directly.
If you're managing a few contractors, a spreadsheet works. If you're managing dozens or coordinating across a team, Kontrable saves time and keeps contractor data organized.
Ready to get organized?
[Start a free trial of Kontrable] – Get invoice workflows, payment tracking, and contract storage. Try it free.
