To open a liaison office in Bangladesh, a foreign company must follow a structured process to establish a physical presence. A liaison office—also known as a representative office—serves as a communication and promotional hub but is not allowed to engage in commercial or revenue-generating activities. This type of office is ideal for foreign companies aiming to explore business opportunities and strengthen their market presence in Bangladesh.
The first step involves obtaining permission from the Bangladesh Investment Development Authority (BIDA), which requires submitting key documents, such as the parent company’s incorporation certificate, board resolution, and financial statements. Once approved, BIDA issues a license, usually valid for three years with the possibility of renewal.
After approval, the liaison office must complete company registration with the Registrar of Joint Stock Companies (RJSC), open a bank account with Bangladesh Bank for inward remittances, and acquire a trade license. Compliance with local tax regulations is also necessary, including submitting annual reports and filings.
Foreign companies may also consider other options, such as setting up a branch office or project office, depending on their specific business needs. However, a liaison office is a low-risk entry point for understanding the market and fostering relationships in Bangladesh before further investment or establishing a private limited company.
A liaison office serves as a representative of the parent company to:
Liaison offices are prohibited from generating income, engaging in trade, or conducting business activities.
The first step is obtaining permission from BIDA, the governing authority for foreign business operations in Bangladesh. Required documents include:
Once submitted, BIDA reviews the application and issues approval upon satisfaction.
After receiving BIDA approval, the liaison office must be registered with the RJSC. This involves submitting:
RJSC registration formalizes the office’s legal existence in Bangladesh.
While a liaison office is not engaged in commercial activities, it must comply with local tax regulations by obtaining a Tax Identification Number (TIN). This registration is mandatory to fulfill reporting and regulatory obligations. Additionally, VAT registration may be required depending on the specific nature of the office’s operations.
For instance, registration becomes essential if the liaison office incurs costs or engages in activities subject to VAT under local laws. These measures ensure the liaison office operates within the legal framework, avoiding potential non-compliance issues.
It is advisable to consult with tax professionals to understand the precise requirements based on the scope of activities. Timely registration demonstrates compliance and fosters a transparent relationship with tax authorities, ensuring smooth operations for the liaison office.
Liaison offices need a bank account to receive funds from the parent company. This account is typically non-repatriable and used only to cover operational expenses like salaries, rent, and utilities. Documents required include:
A liaison office in Bangladesh can employ local staff to oversee daily operations, ensuring smooth functioning and coordination. Employment contracts must strictly adhere to Bangladeshi labor laws, which encompass regulations on working hours, leave entitlements, termination policies, and other employment conditions. Salaries should be paid in compliance with the local standards, ensuring timely payments and providing statutory benefits such as provident fund contributions, gratuities, and bonuses, as applicable.
Additionally, employers must comply with minimum wage regulations and ensure a safe and healthy working environment for their staff. Proper documentation, such as written contracts and salary records, is essential to maintain legal compliance and transparency. Adhering to these laws avoids legal complications and fosters goodwill among employees, boosting workplace efficiency and morale. Engaging local professionals familiar with these regulations is advisable for seamless recruitment and compliance management.
Liaison offices must adhere to periodic reporting requirements:
At S. Rahman & Co., we offer comprehensive services to assist foreign companies in establishing and managing liaison offices in Bangladesh. Our support includes:
Establishing a branch office or registering a liaison office in Bangladesh presents foreign investors with a strategic gateway to one of South Asia’s most vibrant markets. This process, while offering significant benefits, requires foreign companies to navigate through several regulatory and compliance procedures. A liaison office, unlike a branch office, does not engage in direct commercial activities but serves as a representative for the parent office, helping to explore market opportunities and build relationships.
Foreign direct investment (FDI) is a key driver in Bangladesh’s economic growth, and foreign investors must ensure they meet all necessary requirements, including obtaining approvals from the Bangladesh Investment Development Authority (BIDA) and adhering to ongoing compliance obligations. It’s essential to follow the correct procedures to register the liaison office and comply with local regulations, such as acquiring a work permit for expatriate employees and coordinating with the Bangladesh Embassy or High Commission for relevant paperwork.
This complete guide outlines the necessary steps for setting up a liaison office in Bangladesh, from securing the required business information to completing registration procedures. By working closely with professional advisors, foreign companies can streamline the setup process, ensuring that all legal and regulatory requirements are met, and positioning themselves for long-term success in the Bangladeshi market.
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