Freelancers: who counts, getting paid and the checks

K-1 sets the stage. Under the Foreign Exchange Regulation Act, 1947 and the rules made under it, ADs are permitted to facilitate the foreign exchange transactions of freelancers and individual service exporters.

Bangladesh Bank has issued Part K as a guidance note for two reasons:

• to make sure these transactions run smoothly; and
• to consolidate the relevant rules in a single reference, so nobody has to hunt through several parts of the circular.

Who does it cover? Freelancers and individual service exporters who export services in non-physical form. The circular gives examples: ICT services, BPO (business process outsourcing) and online professional services. The "e.g." tells us the list is an example, not a complete list.

You have met many of these ideas before: H-2 in Lesson 23 (individuals doing outsourced work), and the gateways, cards and wallets of Lessons 26 and 27. Part K brings them together in one place. Where Part K's words differ from those earlier parts, this lesson follows Part K and says so.

K-2 answers Enzo's oldest question: "Do I need an EXP form?"

• No EXP form. The export procedures for physical goods, including submitting the EXP Form, do not apply to services exported through the internet or other electronic media. A logo sent by e-mail never passes a port, so there is nothing for Customs to see.
• But the money rules stay. The realisation (actually receiving the money), repatriation (bringing it home) and reporting of the export proceeds are still governed by the relevant provisions of the prevailing foreign exchange regulations.

In short: the paperwork for goods drops away, but the money must still arrive, come home and be reported. This matches what Lesson 23 taught under H-1 for software sent by internet. K-2 itself doesn't list which provisions apply; it simply points to the prevailing foreign exchange regulations.

K-3 is about getting paid, in two steps.

(1) Payment on delivery, backed by electronic evidence. Freelancers may receive payments from non-resident customers once the services are delivered. These deals may not have the usual export papers, such as invoices or shipping documents. That's fine. Instead, they will be supported by appropriate electronic evidence. Think of it this way: a garment exporter has a bill of lading; a designer has an e-mail trail, a contract and a payment message.

(2) The AD checks, then credits. After due verification of the electronic evidence, the AD may:

• credit the equivalent amount in local currency (Taka) to the freelancer's account; and
• keep the eligible portion in foreign currency in an Exporters' Retention Quota (ERQ) account.

So the freelancer's money splits into two pots: Taka for daily life, and some dollars kept in the ERQ account. K-3 does not state the ERQ percentage; it only says "eligible portions". In Lesson 27 (I-7) we saw that the bank should ask the customer about this option before converting.

K-4 tells the AD how to check a deal when there are no traditional documents. There are three parts.

(1) Is the deal genuine? The AD must satisfy itself that the transaction is genuine, using electronic records, along with the inward remittance messages. The circular lists examples:

• e-mails;
• contracts;
• invoices (if available);
• platform statements;
• other digital communications.

The words "including but not limited to" mean the list is open. Other genuine digital records can count too.

(2) Can this person really do the work? The AD must ensure the freelancer has the necessary capability and profile consistency to provide the service. A graphic design graduate paid for logos fits. A customer whose profile shows no link to software, suddenly receiving big "app development" payments, needs a closer look.

(3) The Form-C line.

• Inward remittances up to USD 20,000 (Twenty thousand) or equivalent may be credited without Form-C.
• Transactions above this amount must be supported by an online Form-C (ICT), submitted through designated secure digital applications.
• There is an exception: "unless otherwise permitted under relevant instructions", including those in Part-L of the circular. Part L is explained in Lessons 32 and 33 (see the note below).

Lesson 23 (H-2) had the same USD 20,000 line. Part K's wording names the online Form-C (ICT) and secure digital applications for amounts above it. K-4 speaks of each remittance or transaction; it doesn't say anything about adding several payments together. Note: Part L of the same circular (L-6, Lesson 33) says Form-C and Form-C (ICT) stand discontinued, and that until banks' secure digital interfaces are ready, the purpose and supporting information are collected through banks' existing digital channels. The original circular is always the final word.

K-5 covers online payment gateways, the route many freelancers use for small payments. You met it in detail in Lesson 26 (I-3). Part K repeats the key points:

(1) The route. ADs may facilitate bringing home small-value service export proceeds through internationally recognised Online Payment Gateway Service Providers (OPGSPs).

(2) The limit. The maximum is USD 10,000 or equivalent per transaction.

(3) The accounts. ADs keep a separate nostro collection account for each OPGSP. Money in exporters' notional accounts is automatically swept into these nostro collection accounts.

(4) Nothing parked abroad. No foreign exchange earnings may be retained in notional accounts abroad. All proceeds must be repatriated to Bangladesh. A notional account is a waiting room, not a savings box.

(5) The detailed rules. ADs and other parties must follow the operational details in paragraph 3, Part-I of the circular, which Lesson 26 walked through.

Notice the two different numbers in this lesson: USD 20,000 is the Form-C line in K-4; USD 10,000 is the per-transaction limit for the gateway route in K-5. Don't mix up the two.