QROPS Bangladesh. Pension Tax Relief for British Expats in Bangladesh
Both British expats living in Bangladesh as well as Bangladeshis who have worked in the UK can transfer their pension offshore to a QROPS in Bangladesh in order to avoid paying taxes in the UK. Private pension in the UK attract a 55% tax upon death and UK income taxes from 0% – 50% depending on which tax bracket you fall into.
You can move your pension to a QROPS Bangladesh to avoid UK taxes and increase your investment options. Possible QROPS jurisdictions include New Zealand and Gibraltar.
For Bangladeshis who used to work in the UK, you can also transfer your UK pension into a QROPS to avoid UK taxes. Anyone who has worked in the UK and will retire abroad can transfer their UK pension offshore for tax efficiency.
Why retire or work in Bangladesh as a British expat?
Nearly 10,000 Brits live in Bangladesh. The country is listed among the Next Eleven economies and Global Growth Generator countries. Bangladesh continues to face a number of major challenges, including widespread political and bureaucratic corruption, economic competition relative to the world, serious overpopulation, widespread poverty, and an increasing danger of hydrologic shocks brought on by ecological vulnerability to climate change.
The name Bangladesh means “Country of Bengal” in the official Bengali language. The borders of present-day Bangladesh were established with the separation of Bengal and India in 1947, when the region became East Pakistan, part of the newly formed nation of Pakistan. However, it was separated from the western wing by nearly a thousand miles of Indian Territory. Due to political exclusion, ethnic and linguistic discrimination as well as economic neglect by the politically-dominant West Pakistan, frustrations grew against West Pakistan and led to the Bangladesh Liberation War in 1971, which the Bengali people won with the support of India.
After independence, the new state endured famines, natural disasters and widespread poverty, as well as political turmoil and military coups. The restoration of democracy in 1991 has been followed by relative calm and economic progress.
Bangladesh is a secular republic and a parliamentary democracy and is the 8th most populous country. Although Bangladesh suffers from high poverty, it is well known for its textile and garment exports. Many British expats come here to look after factories or companies based in Bangladesh. Also, many Bangladeshis who have worked in the UK all their life consider returning to Bangladesh as it is a cheaper place to live in retirement with a warmer climate than the UK.
A major part of the coastline is made up of marshy jungle. Bangladesh includes the Sundarbans, the largest mangrove forest in the world and home to diverse flora and fauna, including the Royal Bengal Tiger. Nearly 90% of Bangladeshis are Muslim, with most of the rest being Hindu. Practicing Christianity in Bangladesh may prove problematic for some British expats.
For British expats who have made the move to Bangladesh and intend to retire abroad, a pension transfer to a Qualified Recognized Overseas Transfer would avoid UK taxation.
Benefits of Transferring Your UK Pension to a QROPS Bangladesh
What are the benefits of a QROPS Bangladesh Pension Transfer for British expats?
• Currency choice. You can choose to have your pension transferred to a QROPS denominated in USD, EUR or keep it in GBP
• Have the ability to make higher returns with freedom of investment
• Family Protection: Upon death, the entire pension pot gets passed on to your nearest and dearest
• Security: The pension is held in a secure jurisdiction such as Gibraltar or the New Zealand has its own strong financial regulations which are tax efficient
What is QROPS Bangladesh?
A Qualifying Recognized Overseas Pension Scheme (QROPS Bangladesh) allows your UK pension to be transferred offshore to reduce your tax burden. Effectively, you will no longer pay UK tax on your pension whilst you are offshore and after 10 years of living offshore, the reporting requirements to HMRC cease.
If you are living in Bangladesh at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS Bangladesh to avoid further UK taxes down the line. A QROPS Bangladesh is an appropraite vehicle to avoid UK taxes if you are considering living or retiring abroad.
Tax on a Bangladesh QROPS
An individual is treated as a resident of Bangladesh if that person stays in Bangladesh for 182 days or more in any income year; or 90 days or more in an income year if that person has previously resided in Bangladesh for a period of more than 365 days during the four preceding years.
Residents (including British expats working in Bangladesh) are taxed on worldwide income. However, foreign nationals, though resident for tax purposes, are generally taxed only on income earned from working in Bangladesh and on foreign income received from Bangladesh sources.
For Bangladeshis sending money back from the UK, they avoid UK taxes.
As per S.R.O. No. 216-Law/ Income tax/2004 dated 13/07/2004 foreign income of a Bangladeshi national, irrespective of resident or non-resident, is exempt from payment of tax if it comes through official channels. However, if they hold a UK pension, they would have to pay UK taxes including the 55% tax upon death. If they move to a QROPS they can avoid these taxes and the income would also avoid tax upon remittance.
For those working in Bangladesh and receiving income from abroad for services in Bangladesh, they would be taxed though. But, a QROPS would be exempt.
Personal Income Tax Rate in Bangladesh
If you are working in Bangladesh, income tax is levied on residents based on progressive tax rates, which range from 10% – 25%, while non-residents are taxed at the flat rate of 25%. Please note that your QROPS would be exempt.
Are there any QROPS in Bangladesh?
Do I need to move my pension to Bangladesh?
Yes, there is one recognized scheme, the General Provident Fund which would transfer your pension income to Bangladeshi Taka and would be in the form of an annuity. However, if you want to keep your pension in GBP and have the entire amount passed on to your loved ones upon death as a cash lump sum rather than an annuity income, then you are much better off transferring to a QROPS in New Zealand or Gibraltar which would keep your pension in GBP, but free from UK taxation.
QROPS New Zealand for a British Expats in Bangladesh
- Avoids All Taxation
- Currency choice of GBP, EUR or USD
- 30% lump sum at 55 available
- 100% of any increase in pension pot after transfer available as a further lump sum
- 5 investment strategies available dependent on your risk profile
QROPS Gibraltar for a British Expat in Bangladesh
- Avoids UK and Bangladesh taxation
- Flat 2.5% income tax rate at source in Gibraltar
- Currency choice of GBP, EUR or USD
- 30% lump sum at 55 available
- Much wider investment range allowed including shares, mutual funds, ETF’s, bond
- fund, hedge funds, high interest bank notes, etc.
Should I Move My UK Pension to Bangladesh?
Unless you are a Bangladeshi and have your heart set on moving to the local currency and receiving an annuity payment as you have retired already, you would be better off with a move to a QROPS in Gibraltar which allows much more investment freedom, whilst still protecting your for tax. Especially for younger clients under 60, you have a chance to increase your investment portfolio.
For enquiries, please send email to firstname.lastname@example.org
QROPS Bangladesh article written by QROPS Specialists.QROPS Bangladesh Pension Transfer for British Expats to Avoid Paying Taxes by Richard Malpass