Mode of Entry into Bangladesh

A foreign company intending to expand its business to Bangladesh, usually have option either to choose
Equity-based entry mode or Non-equity-based entry mode.
Incorporating a subsidiary company is considered as Equity-based entry mode and setting up a Branch or
Liaison office is called non-equity-based entry mode.

Equity-based Entry / Incorporate a Subsidiary:

Foreign Investors can register or incorporate a fully-owned subsidiary or a joint venture;
Incorporate companies are governed by Register of Joint Stock Companies and Firms and regulated
under the companies Act 1994;
Incorporated subsidiary company is considered as a separate legal entity then its parent;
For further information, incorporation procedures and requisite documentation please visit the
page Subsidiary Company Registration.

Non-equity-based Entry / Setting up of Branch or Liaison Office:

Setting up a Branch of Liaison office by registering with BIDA (Bangladesh Investment Development
Authority);
As the licensing authority, a branch and a liaison office must comply the regulations of BIDA;
For further information, BIDA permission procedures and requisite documentation, please visit the
page Registration of Liaison Office and Registration of Branch Office.
How to Open A Branch Office in Bangladesh
A registered branch office in Bangladesh is an extension of its foreign parent company registered outside
of Bangladesh. The status of branch is similar to liaison (representative) office, only exception branch
can engage in commercial or revenue generating activities in a limited area with the permission of
Bangladesh Development Authority (BIDA)

Characteristics of a Branch office In Bangladesh

It is an extended version of the foreign parent company.
The Memorandum and Articles of Association (M&AA) of the parent company/foreign company are the
applicable to its management and infrastructure.
The liabilities of its business-oriented debt and losses have to be incurred by the parent company.
The branch office must confine its business activities within the Bangladesh Investment Development
Authority (BIDA) permission.
$50,000 must bring to Bangladesh branch office as initial setup and operating cost for 6 (six) months.
The Bangladesh branch office must bear the same name as parent company, and the name is subject to
the approval of the Registrar of Company of RJSC.

Steps and Procedure to Setup a Branch Office in Bangladesh

Apply to BIDA for Branch office permission.
Obtain permission letter for branch office from BIDA.
Apply for Tax Registration.
Open an operational bank account in Bangladesh.
As statutory requirement an amounting USD 50,000 shall bring to Bangladesh by 2 (two) months of the
permission.
Apply to RJSC (Register of Joint Stock Company of Bangladesh) for registration.
Apply for other registration and licenses like, trade license, VAT/GST registration, export registration
(ERC), import registration (IRC) and etc.

Documents Required Registering a Branch Office in Bangladesh

Certified copy of the passport for all directors of the foreign company;
Photograph of all directors of foreign company
Certified copy of incorporation certificate, MOA&AOA, auditors report for last FY, Tax registration details
of the foreign company
A board resolution to take the decision to open a liaison office in Bangladesh, authorizing a specific
individual to sign necessary registration documents on behalf of the foreign company
A board resolution to select the bank in Bangladesh to open an operative bank account and the bank
signatories
Deceleration of non-commercial activities conducted in Bangladesh under the liaison office;
Bangladesh liaison office organization chart
Pros and Cons of Branch Office in Bangladesh

Pros Cons

You can get temporary and express entry for

certain period with the option of extension.
Can participate in a limited revenue
generating activity.
Easy and simple exit from Bangladesh market.
Can employ foreign employee with work permit.
A minimum of $50,000 must bring to
Bangladesh by 2 (two) months of
As Branch office, it is able to retain its brand
registration.
identity, which is favorable if the brand is already
highly recognized here.
Corporate tax is applicable in case of
generating local revenue.
Does not require any share capital or equity.
and partners.

How to Register A Liaison Office in Bangladesh

A liaison office is suitable for foreign companies that wish to set up an administrative office to explore
business opportunities in Bangladesh or coordinate activities on behalf of its parent company. A liaison
office does not have any legal status and thus, cannot be engaged in any commercial or revenue yielding
activities, or enter into any contracts or transactions.

Characteristics of a Liaison office In Bangladesh

1. The liaison (representative) office must confine its activities only to market-related research,
building trade contacts, handling product inquiries, coordinating, and participating in trade
shows and exhibitions.
2. It must not be engaged in any trading activities, including signing any business contracts, issuing
invoices and receipts, opening or receiving letters of credit, or providing any service for a fee.
3. The Memorandum and Articles of Association (M&AA) of the parent company/foreign company
are the applicable to its management and infrastructure.
4. The regularity or licensing authority of the liaison (representative) office is Bangladesh
Investment Development Authority (BIDA).
5. A liaison office must bring $50,000 to Bangladesh as initial setup and operating cost for 6 (six)
months.
6. The Bangladesh liaison (representative) office must bear the same name as the head office,
clearly stating that it is a liaison (representative) office, and the name is subject to the approval
of the Registrar of Company of RJSC.

Steps and Procedure to setup a Liaison Office or Representative Office in Bangladesh

1. Apply to BIDA for Liaison office permission.
2. Obtain permission letter for branch office from BIDA.
3. Apply for Tax Registration.
4. Open an operational bank account in Bangladesh.
5. As statutory requirement an amounting USD 50,000 shall bring to Bangladesh by 2 (two)
months.
6. Apply to RJSC for registration.
 7. Apply for other registration like trade license or VAT/GST (if required).

Documents Required Registering a Liaison of Representative Office in Bangladesh

1. Certified copy of the passport for all directors of the foreign company
2. Photograph of all directors of foreign company
3. Certified copy of incorporation certificate, MOA&AOA, auditors report for last FY, Tax
registration details of the foreign company
4. A board resolution to take the decision to open a liaison office in Bangladesh, authorizing a
specific individual to sign necessary registration documents on behalf of the foreign company
5. A board resolution to select the bank in Bangladesh to open an operative bank account and the
bank signatories
6. Deceleration of non-commercial activities conducted in Bangladesh under the liaison office
7. Bangladesh liaison office organization chart
Pros and Cons of Liaison Office in Bangladesh

Pros Cons

1. No restriction in business activity, like any other local

company an FDI local company can do any business.

2. Shareholders are not liable for the company's debts

beyond the amount of capital they have put into the 1. There are tighter rules and
company. regulations compared to Liaison
office or Liaison office.
3. It is easy to transfer ownership through the selling of
shares or issuing of new shares to new investors. 2. Equity investment is not allowed
to remit back to source until
4. It has perpetual succession, which means there is no dissolution of the company.
need to wind up the company in the event of deaths, or
changes in shareholders or directors. 3. Dissolution process is long
procedural, bit costly and time
5. It is easier to obtain funding from investors or loans consuming.
from financial institutions.

6. It has higher credibility and status in the minds of

customers and partners.
Restricted and Protected Business For Foreign Investor In Bangladesh
Though foreign investment and 100% foreign ownership is permitted in general, with a limited industries
and business activities which have some restriction for foreign investment in Bangladesh as below:

Businesses where 100% Foreign ownership is not permitted

Number of business activities mentioned as below where 100% foreign ownership is not allowed:
Courier service agent
Buying houses and indenting agents
Advertising agency
Shipping agent
Freight forwarding agents
Airlines/railway GSA/PSA/cargo agent

Protected Industries
Foreign Investment in certain industries in Bangladesh also require prior approval of the relevant
authority, upon receiving the due approval RJSC accept company registration application:
Satellite Channel
Cargo/passenger aviation
Sea-bound ship transport
Fishing in the deep sea
Bank, Insurance and other financial institution
Generation, supply and distribution of power
Exploration, extraction and supply of natural resources
Large-scale infrastructure project
Crude oil refinery (recycling/refining of lube oil used as fuel)
Medium and large industry using natural mineral as raw materials
Sea-port/Deep sea-port
VOIP/IP telephone
Industries using heavy minerals accumulated from sea beach

Restricted Industries
Foreign investment to the below industries in Bangladesh is fully restricted:
Production of nuclear energy;
Arms and ammunition and other defense equipment and machinery.
Forest plantation and mechanized extraction within the bounds of reserved forests
Security printing and mining
Compliances for a Branch Office (with revenue generating activities)
almost at the same scale of a subsidiary company

Annual Compliances
Company Affairs (Companies Act 1994)
Statutory auditing

Income Tax (Income Tax Ordinance 1984):

Filing of annual tax return u/s 75
Filing of annual return of salary TDS statements u/s 108
Filing of annual return of employee annual tax return submission details u/s 108A

Value Added Tax/ GST (VAT & SD Act 2012):

Collection of VAT clearance certificate

Renewal of Business Licenses:

Renewal of Trade License
Renewal of trade body membership (if any)
Renewal of Import & Export Registration Certificate (if any)
Other industry related licenses (if any)

Half-Yearly Compliances
Income Tax (Income Tax Ordinance 1984):
Filing of half-yearly TDS/withholding tax return submission u/s 75A

Quarterly Compliances
BIDA Reporting:
Un-audited quarterly financial statements
Filing of quarterly reporting to BIDA, Bangladesh Bank and Tax authority.

Monthly Compliances
Income Tax (Income Tax Ordinance & Rule 1984):
Withholding tax / tax deducted at source (TDS) on regular basis as and when payment made or create
payable
Treasury deposit of TDS
Issuance of withholding certificate
Filing of suppliers’ TDS statements under rule 18
Filing of salary TDS statement u/r 21
Day to day transaction compliances

Value Added Tax/ GST (VAT & SD Act 2012):

Deceleration of Input-Output Co-efficient whenever the price or cost changes +/-7% from the latest
declared price/cost
Issuance of VAT 6.3 (Tax Invoice) on regular basis
Maintenance of VAT record keeping on regular basis
Withholding VAT / VAT deduction at source (VDS) when make suppliers’ payment
Treasury deposit of VDS
Issuance of VDS certificate (VAT 6.6)
Filing of monthly VAT return (VAT 9.1)
Declaration for transactions which are above BDT 200K.
What are the compliances for a liaison office in Bangladesh
Compliances for a Liaison office in Bangladesh is relax compare to a private or a subsidiary company.
The compliance of a Branch office without revenue generating activities is same as a Liaison office.
Compliances related to a Liaison office are as below:

Annual Compliances
Company Affairs (Companies Act 1994)
Statutory auditing;
Income Tax (Income Tax Ordinance 1984):
 Filing of annual tax return u/s 75
 Filing of annual return of salary TDS statements u/s 108
 Filing of annual return of employee annual tax return submission details u/s 108A
Renewal of Business Licenses:
 Renewal of Trade License

Half-Yearly Compliances
Income Tax (Income Tax Ordinance 1984):
 Filing of half-yearly TDS/withholding tax return submission u/s 75A

Quarterly Compliances
BIDA Reporting:
 Filing of quarterly receipt & payment reporting to BIDA, Bangladesh Bank and Tax authority.

Monthly Compliances
Income Tax (Income Tax Ordinance & Rule 1984):
 Withholding tax / tax deducted at source (TDS) on regular basis as and when payment made or
create payable
 Treasury deposit of TDS; Issuance of withholding certificate
 Filing of suppliers’ TDS statements under rule 18
 Filing of salary TDS statement u/r 21
 Day to day transaction compliances
Value Added Tax/ GST (VAT & SD Act 2012):
 Maintenance of VAT record – keeping on regular basis (mostly purchase records)
 Withholding VAT / VAT deduction at source (VDS) when make suppliers’ payment
 Treasury deposit of VDS
 Issuance of VDS certificate (VAT 6.6)
 Filing of monthly VAT return (VAT 9.1)
 Declaration for transactions which are above BDT 200K
What are the compliances for a private limited company in
Bangladesh
Compliances for a private limited or subsidiary company in Bangladesh becoming more stringent than
ever before. Apart from the annual compliances, there are number of compliances on monthly, quarterly
and half-yearly basis as below:

Annual Compliances
Company Affairs (Companies Act 1994)
 Statutory auditing; – Holding annual general meeting; – Annual RJSC return filing;
Income Tax (Income Tax Ordinance 1984):
 Filing of annual tax return u/s 75;
 Filing of annual return of salary TDS statements u/s 108;
 Filing of annual return of employee annual tax return submission details u/s 108A;
 Renewal of Tax Exemption Certificate (for tax exempted company);
Value Added Tax/ GST (VAT & SD Act 2012):
 Collection of VAT clearance certificate;
Renewal of Business Licenses:
 Renewal of Trade License;
 Renewal of trade body membership (if any);
 Renewal of Import & Export Registration Certificate (if any);
 Other industry related licenses (if any);

Half-Yearly Compliances
Income Tax (Income Tax Ordinance 1984):
 Filing of half-yearly TDS/withholding tax return submission u/s 75A

Quarterly Compliances
Foreign Direct Invest Reporting:
 Un-audited quarterly financial statements;
 Filing of quarterly F1 reporting to Bangladesh Central Bank.
Monthly Compliances
Income Tax (Income Tax Ordinance & Rule 1984):
 Withholding tax / tax deducted at source (TDS) on regular basis as and when payment made or
create payable
 Treasury deposit of TDS; Issuance of withholding certificate
 Filing of suppliers’ TDS statements under rule 18
 Filing of salary TDS statement u/r 21
 Day to day transaction compliances
Value Added Tax/ GST (VAT & SD Act 2012):
 Deceleration of Input-Output Co-efficient whenever the price or cost changes +/-7% from the
latest declared price/cost;
 Issuance of VAT 6.3 (Tax Invoice) on regular basis;
 Maintenance of VAT record keeping on regular basis;
 Withholding VAT / VAT deduction at source (VDS) when make suppliers’ payment;
 Treasury deposit of VDS;
 Issuance of VDS certificate (VAT 6.6);
 Filing of monthly VAT return (VAT 9.1);
 Declaration for transactions which are above BDT 200K.
How to Register A Private Limited Company in Bangladesh
A foreign investor is eligible to register a 100% foreign owned Private Limited Company (PLC) in
Bangladesh which is commonly known as FDI company. It is the preferred business arrangement for
individual entrepreneurs who want to establish a local company in Bangladesh.

Characteristics of a Private Limited Company in Bangladesh

It can have minimum 2 and maximum 50 shareholders (owners).
It must have minimum 2 directors.
Any individual, who is at least 18 years old, is eligible for shareholder.
An initial paid-up capital of at least BDT 1. Additional capital can be injected any time after
incorporation.
It has legal identity entitlements of a natural person.
Registered office address must be a physical address.
It can own property in its name.
It can sue or be sued in its own right. Thus, shareholders are not involved in the legal proceedings.
It does not depend on any individual member or shareholders for its existence.
Foreigners can have 100% ownership of company shares.
Share transfer and transmission is allowed.
The name of the company should end with Ltd., Private Limited or Limited.
It must appoint an auditor within 30 days from the date of its incorporation.

Steps and Procedure to Register a Private Limited Company in Bangladesh

It can have minimum 2 and maximum 50 shareholders (owners).
It must have minimum 2 directors.
Any individual, who is at least 18 years old, is eligible for shareholder.
An initial paid-up capital of at least BDT 1. Additional capital can be injected any time after
incorporation.
It has legal identity entitlements of a natural person.
Registered office address must be a physical address.
It can own property in its name.
It can sue or be sued in its own right. Thus, shareholders are not involved in the legal proceedings.
It does not depend on any individual member or shareholders for its existence.
Foreigners can have 100% ownership of company shares.
Share transfer and transmission is allowed.
The name of the company should end with Ltd., Private Limited or Limited.
It must appoint an auditor within 30 days from the date of its incorporation.
Pros and Cons of a Private Limited Company in Bangladesh

Pros Cons

No restriction in business activity, like any other local There are tighter rules and
company an FDI local company can do any business. regulations compared to Liaison
office or Liaison office.
Shareholders are not liable for the company's debts beyond
the amount of capital they have put into the company. Equity investment is not allowed to
remit back to source until
It is easy to transfer ownership through the selling of shares
or issuing of new shares to new investors.

It has perpetual succession, which means there is no need

dissolution of the company.
to wind up the company in the event of deaths, or changes
in shareholders or directors.
Dissolution process is long
procedural, bit costly and time
It is easier to obtain funding from investors or loans from
consuming.
financial institutions.

It has higher credibility and status in the minds of customers

and partners.