Investment in Bangladesh
1. Areas Allowed for Foreign Investment
Foreign investment is encouraged in all sectors except for the following four sensitive sectors:
- Arms and explosive
- Nuclear energy
- Security printing and printing of notes and coins
- Mechanical extraction of reserved forests
2. Incentives for Foreign Investors
- Foreign investment is protected by Foreign Investment Promotion & Protection Act, 1980;
- 100% foreign equity is allowed;
- Presence of unrestricted exit policy;
- Tax holiday for 5-7 years for 23 selected sectors;
- Private power companies are allowed a tax holiday for 15 years;
- Accelerated Depreciation Allowance (ADA) is allowed instead of tax holiday for newly industrial units under specified schedule;
- Concessionary duty on imported machinery: 1% import duty on capital machinery and spares for 80% to 100% export oriented industry. This is applicable for initial installation or BMR/BMRE of the existing industries;
- 3% import duty on capital machinery and spares for other industries. This is applicable for initial installation or BMR/BMRE of the existing industries;
- Value Added Tax (VAT) is not payable for imported capital machinery and spares;
- Avoidance of double taxation on the basis of Double Taxation treaties;
- Full repatriation facilities of dividend and capital in the event of exit;
- Provision for granting permanent residence permit on investing US$ 75,000 and citizenship offer investing US$ 5,000,000.
- Lower living costs for the expatriates;
- Wages and salaries are lowest in the region;
- Duty draw back facilities;
- Consistent adaptation of market liberalization and privatization policies;
- Investment by NRBs is considered as FDI;
- Up to 10% of public shares are retained for NRBs;
- NRBs are allowed to retain foreign currency deposits in NFCD accounts;
- Highest remittance senders are awarded with CIP;
3. Road Map to Investment in Bangladesh
4. Registration of a Foreign Company in Bangladesh
A foreign company needs to register its entity to the office of the Registrar of Joint Stock Companies and Firms (RJSC) and also has to obtain a trade license from the local City Corporation office and get an income tax and VAT certificates from the National Board of Revenue for operating in Bangladesh.
To register a company it has to submit the following papers to the RJSC office along with the applicable registration fee. However, it does not need to have the Name Clearance from RJSC which is however mandatory for local companies.
- Memorandum and Articles of Association of the Company (Form No. XXXVI);
- Address of the registered or principal office of the company (Form No. XXXVII);
- List of directors and managers (Form No. XXXVII);
- Return of persons authorized to accept service (Form No. XXXIX);
- Notice of situation of the principal place of business in Bangladesh (Form No. XLII);
- A board meeting resolution that takes a decision to set up a company in Bangladesh;
- Encashment certificate obtained from any scheduled bank;
- Permission from Bangladesh Investment and Development Authority (BIDA).
Note: All the above-mentioned forms are available the RJSC website at:
5. Fees for Registering a Foreign Company
A company has to pay the required fees for registering with RJSC. For filing 6 documents (5 filled in forms @ BDT 200.00 per document plus 1 Memorandum & Articles of Association, @ BDT 200.00) BDT 1,200.00).
6. Taxes to be Paid by Foreign Companies
Similar to the local entities, foreign companies and investors are liable to pay income tax and corporate tax as per existing rules and procedures.
6a. Income Tax
Income tax is dependent on whether an individual is classified as resident or non-resident in a given tax year. An individual is classified as a resident if they stay in Bangladesh for at least 182 days in one income year, or for 90 days if they have previously resided in Bangladesh for more than 365 days in the four preceding years. Residents are subject to progressive rates of income tax, which range from 10% to 30%. Non-residents, with the exception of Bangladeshi non-residents, are subject to pay a flat rate of 30%.
6b. Corporate Tax
The following table provides a description of corporate tax rates presently prevailing in Bangladesh:
|Sl. No.||Nature of the|
For publicly traded companies (except bank, insurance, leasing and other financial institutions)
Any listed company which declares a dividend at 20% or higher, will benefit from a tax abatement at 10%.
Any listed company which declares a dividend at 10% or lower, or does not distribute a dividend approved/ declared by SEC, will be required to pay tax at 37.5%.
For non-publicly traded companies (except bank, insurance, leasing and other financial institutions)
Bank, insurance, leasing and other financial institutions
|04||For mobile phone operator companies|
|If the mobile phone operator company transforms to a publicly traded company offering at least 10% of paid up capital in an IPO, then the tax rate will be 35%.|
Source: Bangladesh Board of Investment Guidelines (Page 60)
7. Opening of Bank Accounts by Foreign Companies
A non-resident may open a Non-Resident Taka Account (NRTA) in the name of the proposed company/enterprise of foreign investors wishing to invest or set up a business in Bangladesh, without requiring prior approval from Bangladesh Bank. However, the account may only receive inward remittances from abroad.
After registration/commencement of the business, a new account in the name of the company may be opened following usual procedures and the account opened previously should be closed immediately and balances lying therein shall be transferred to the new Foreign Currency (FC) accounts and Non-Resident Foreign Currency Deposit (NFCD) accounts with foreign exchange brought from outside. Balance of these accounts are freely transferable abroad.
If for any reason, the proposed investment/incorporation does not take place, then the balance of the account, after meeting the required expenses, may be allowed to be repatriated without prior approval from Bangladesh Bank.
A foreign investor may also open and operate a Taka account freely with any bank while he is a resident in Bangladesh..
Non-residents may also open a Non-Resident Investor’s Taka Account (NITA) with any Authorized Dealer (AD) bank in Bangladesh with foreign exchange remitted from abroad through normal banking channel or by transfer of funds from non-resident investor’s foreign currency account for portfolio investment in Bangladesh.