Bangladesh-US treaty: status and key articles
The Bangladesh-US tax convention has been in force since 2007. Coverage includes income tax, dividends, royalties, interest, and residency tie-breakers.
- Article 7 (Business Profits): Bangladeshi-resident operating profits taxable only in Bangladesh without US PE.
- Article 10 (Dividends): 10% for 10%+ ownership. 15% standard.
- Article 11 (Interest): 5-10% on portfolio interest.
- Article 12 (Royalties): 10% under the treaty.
- Article 23 (Relief from Double Taxation): Bangladeshi FTC mechanism.
Withholding rates by income type for Bangladeshi residents
| Income type | Default US rate | Bangladesh treaty rate |
|---|---|---|
| US-source dividends (10%+ ownership) | 30% | 10% |
| US-source dividends (standard) | 30% | 15% |
| US-source portfolio interest | 30% | 5-10% |
| US-source royalties | 30% | 10% |
| Business profits without US PE | Generally not taxed | Generally not taxed |
How NBR treats US LLCs
Bangladesh's National Board of Revenue (NBR) generally treats US single-member LLCs as transparent for Bangladeshi tax purposes. LLC operating income flows through to your annual Bangladeshi tax return and is taxed at applicable Bangladeshi rates.
Bangladeshi freelancers and agency operators commonly use US LLCs to invoice US clients via Upwork, Fiverr, or direct contracts. Bangladesh Bank requires foreign-source income through formal banking channels; the Wage Earners' Remittance Scheme may apply to specific categories.
How to file W-8BEN-E from Bangladesh
- Line 1: LLC legal name
- Line 4: Chapter 3 status: Disregarded Entity
- Line 5: Country of residence: Bangladesh
- Line 6: Permanent residence address in Bangladesh
- Line 8: US TIN (EIN)
- Line 9: Foreign TIN (your Bangladeshi TIN)
- Part III: claim treaty benefits citing the applicable article
Common mistakes by Bangladeshi founders
- Not filing W-8BEN-E with US payers (30% default applies)
- Missing Form 5472 + 1120 ($25K penalty)
- Not declaring LLC income on Bangladeshi tax return
- Missing Bangladesh Bank channel for USD inflows (informal remittance is non-compliant)
- Confusing Bangladesh tax-resident vs non-resident treatment if living abroad