Author: Shibli zaman | November 24, 2024
Doing Business in Bangladesh
Thanks to its rapidly growing economy, strategic location in South Asia, and steadily expanding consumer market, Bangladesh has emerged as a prime destination for foreign investors. The country offers diverse business opportunities across textiles, technology, and infrastructure industries. When doing business in Bangladesh, companies can choose from several operational structures based on their objectives and needs. These include setting up joint ventures with local partners, establishing branch offices for direct operations, or opening liaison offices to manage communication and market research. Each option has distinct requirements and advantages, making it crucial for businesses to align their strategy with their goals. The government of Bangladesh has introduced streamlined procedures to facilitate foreign investments, offering incentives such as tax holidays and export-oriented benefits.
Additionally, robust reforms in policies and infrastructure development have created a business-friendly environment. However, understanding the permissions, compliance measures, and operational frameworks for foreign entities is essential for smooth entry and sustainable growth. With the right strategy and local expertise, doing business in Bangladesh can yield significant returns, leveraging its competitive labor force and access to regional markets. This dynamic landscape makes Bangladesh an attractive and promising choice for global investors.
Joint Ventures/Consortiums/Associations (JVCA)
Joint Ventures/Consortiums/Associations (JVCA) with a foreign partner(s) engaged in the implementation of development projects of the Government of Bangladesh (GoB) in terms of contracts/sub-contracts signed with respective departments/divisions/employers, etc., have shown diverse practices in their reporting activities and cross-border transactions, preparation of financials, transactions with their branch offices, outward remittances particularly profit remittances, tax payments and return submissions. It can also be structured as a Private Limited Company or a Public Limited Company under the Companies Act 1994 or through a valid contract among the partners of the respective JVCA entity.
Permissions Required
- Valid Contract: A valid contract among the partners of the respective JVCA entity or any entity under the concerned project office has to be signed accordingly.
- Bangladesh Investment Development Authority (BIDA): The Non-Resident Partner forming JVCA must obtain permission from BIDA and other competent authorities if required otherwise.
- Bangladesh Bank: JVCA entities shall notify Bangladesh Bank within 30 Days of obtaining permission from BIDA.
- TAX & VAT: JVCA shall have TIN and BIN registration certificates as per NBR guidelines. Therefore, these entities shall submit prescribed returns on a regular basis.
Operational Guidelines
- Partnership: At least one Bangladeshi partner and one foreign partner.
- Operations: The activities of the JVCA will be confined to those mentioned in the BIDA permission letter.
- Financial Statements: Separate Financial Statements shall be prepared for JVCA entities as per IFRS and FRC, and audited Financial Statements shall contain a Document Verification Code (DVC).
Branch Office
A Branch Office allows foreign companies to conduct business directly in Bangladesh. These offices can generate revenue but are limited to activities approved by the government.
Permissions Required
- Bangladesh Investment Development Authority (BIDA): Permission to establish a branch office with specific activities.
- Registrar of Joint Stock Companies (RJSC): Registration of the branch.
- Tax and VAT Registration: Obtain TIN and VAT numbers for regulatory compliance.
Operational Guidelines
- Scope: Activities must align with BIDA’s approval (e.g., import/export, technical support, consultancy).
- Remittances: Profits can be remitted to the parent company after taxes.
- Reporting: Submit regular activity reports and audited Financial Statements to BIDA and Bangladesh Bank, complying with local accounting and audit requirements.
Liaison Office
A Liaison Office acts as a communication hub for a foreign company and cannot engage in commercial or revenue-generating activities.
Permissions Required
- BIDA Approval: Mandatory for setting up and operating a liaison office.
- RJSC Registration: For formal legal presence in Bangladesh.
- Tax and VAT Registration: Obtain TIN and VAT numbers for regulatory compliance.
Operational Guidelines
- Activities: Limited to market research, promotional activities, and communication on behalf of the parent company.
- Funding: All expenses must be covered by remittances from the parent company.
- Reporting: Submit regular activity reports and audited Financial Statements to BIDA and Bangladesh Bank, complying with local accounting and audit requirements.
Critical Steps for All Business Types
- Preparation of Documents: Includes MOA, AOA, parent company registration, board resolutions, and audited financial statements.
- Approval Process: Obtain permissions from BIDA, RJSC, and sector-specific regulators.
- Bank Account Opening: Required for operational transactions and inward remittances.
- Tax and Compliance: Ensure timely filing of taxes, VAT returns, and other statutory obligations.
- Renewals: Keep permits from BIDA and other authorities updated.
How S. Rahman & Co. Can Help
At S. Rahman & Co., we offer expert guidance and end-to-end support for setting up and managing Joint Ventures, Branch Offices, and Liaison Offices in Bangladesh. Our services include:
- Business structure advisory and registration assistance.
- Obtaining approvals from BIDA, RJSC, and other authorities.
- Tax, VAT, and regulatory compliance support.
- Financial and operational reporting.
- Ongoing audit and advisory services.
Conclusion
Choosing the proper structure for operating in Bangladesh depends on your business goals and the nature of your activities. With the appropriate approvals and compliance, foreign entities can establish a successful presence in this dynamic market.
Contact us today to ensure a seamless setup process for your business operations in Bangladesh!
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