Doing Business in Bangladesh | M A Fazal & Co.

Complete Investor’s Guide • 2024–2025

Doing Business in
Bangladesh

A comprehensive, step-by-step guide for foreign investors — from market entry to full operations, regulatory compliance, and taxation.

🌏 South Asia’s Rising Star 📈 ~6–7% GDP Growth 👥 170M+ Population 🏭 World’s 2nd Largest Garment Exporter 🇧🇩 Investment-Friendly Policies

$460B

GDP (2024 est.)

170M+

Population

15%

Corp Tax (Listed)

15%

Standard VAT Rate

100%

FDI Allowed (Most Sectors)

Export Processing Zones

Why Bangladesh?

Key investment advantages for foreign businesses

🌱

Strong Economic Growth

Bangladesh has maintained one of Asia’s fastest GDP growth rates (~6–7% annually), driven by manufacturing, remittances, and a booming services sector.

Macro Stability

👷

Competitive Labour Cost

Minimum wage in the garment sector is ~BDT 12,500/month (~USD 105). Overall labour costs remain among the lowest in Asia, ideal for manufacturing.

Cost Advantage

🏗️

Special Economic Zones

100+ SEZs and EPZs with tax holidays (up to 10 years), duty-free import of machinery, and full profit repatriation for foreign investors.

Tax Benefits

🛳️

Strategic Location

Gateway between South and Southeast Asia. Chattogram port handles 92% of country’s trade. Close proximity to India, Myanmar, and China supply chains.

Logistics Hub

💰

Full Profit Repatriation

Under the Foreign Private Investment Act 1980, foreigners may repatriate capital, dividends, and profits freely without restriction.

Capital Protection

📋

Investment-Friendly Laws

Bangladesh Investment Development Authority (BIDA) provides one-stop service. Multiple bilateral investment treaties (BITs) protect foreign investors.

Legal Framework

Modes of Market Entry

Choosing the right legal structure for your business

Entry Mode	Best For	Min. Capital	FDI Allowed	Setup Time	Complexity
Private Limited Company (Ltd.)	Manufacturing, services, tech startups	No minimum (recommend USD 50K+)	100%	4–8 weeks	Moderate
Branch Office	Existing foreign companies, testing market	USD 50,000 inward remittance	Yes	6–10 weeks	Moderate
Liaison / Representative Office	Market research, promotion only	USD 50,000 (annual operating cost)	Non-Commercial	4–6 weeks	Low
Joint Venture (JV)	Regulated sectors, local market penetration	As agreed	Up to 100%	8–12 weeks	High
EPZ / SEZ Company	Export-oriented manufacturing	As per BEPZA guidelines	100%	6–10 weeks	Moderate
Sole Proprietorship / Partnership	Small trade, local retail (not for FDI)	No minimum	Not Applicable	1–2 weeks	Very Low

💡 RECOMMENDED FOR MOST FOREIGN INVESTORS

Private Limited Company — The Gold Standard

For most foreign investors, incorporating a Private Limited Company under the Companies Act 1994 provides maximum flexibility, limited liability, 100% foreign ownership capability, and ease of profit repatriation. You need a minimum of 2 shareholders and 2 directors (at least 1 Bangladeshi director is recommended for practical purposes, though not legally required). The company must register with RJSC (Registrar of Joint Stock Companies and Firms).

Step-by-Step Registration Process

Complete incorporation guide with timelines and costs

Name Clearance from RJSC

Apply online at roc.gov.bd for your proposed company name. Submit 3 alternative names. RJSC will verify uniqueness against the existing database. Once approved, the name is reserved for 30 days.

⏱ 1–3 business days 💵 BDT 200–500 (≈ USD 2–5) 📄 Online application

Draft Memorandum & Articles of Association (MOA/AOA)

Prepare the MOA (objects clause, share structure, liability) and AOA (internal governance rules). These must comply with the Companies Act 1994. It is strongly recommended to engage a local chartered accountant or lawyer (e.g., M A Fazal & Co.) at this stage to ensure correctness and avoid costly rejections.

⏱ 3–5 days 💵 Professional fees: BDT 15,000–50,000 📄 MOA + AOA drafts

BIDA Registration (Mandatory for FDI)

All foreign investment projects must register with the Bangladesh Investment Development Authority (BIDA) via bida.gov.bd. Submit: project profile, proposed investment amount, product/service details, and shareholder details. BIDA issues a Registration Certificate which unlocks subsequent approvals (work permits, visa, machinery import, etc.).

⏱ 1–3 weeks 💵 BDT 5,000–30,000 (sliding scale) 📄 Project profile, passport copies

Incorporate at RJSC (Company Registration)

File online: Form-I (MOA/AOA), Form-IX (Declaration of Compliance), Form-XII (Particulars of Directors), and pay the stamp duty. For foreign shareholders, apostilled/notarized and Bangladesh embassy-attested documents of the parent company/shareholders must be submitted. RJSC then issues the Certificate of Incorporation (COI).

⏱ 5–10 business days 💵 BDT 10,000–50,000 (stamp + govt fees based on authorised capital) 📄 MOA, AOA, Forms I/IX/XII, ID proofs

Open a Bank Account & Remit Capital

Open a corporate bank account with a scheduled bank in Bangladesh. For foreign investment, bring capital in through proper banking channels (wire transfer). The bank will issue an “Encashment Certificate” confirming foreign currency received — this is critical for BIDA records and future profit repatriation. Recommended banks: Dutch-Bangla Bank, HSBC Bangladesh, Standard Chartered Bangladesh, BRAC Bank.

⏱ 1–2 weeks 💵 Min. deposit per bank policy (USD 1,000–5,000) 📄 COI, MOA, Board resolution, KYC

Obtain TIN (Taxpayer Identification Number)

Register at the National Board of Revenue (NBR) e-TIN portal: etinbd.gov.bd. Both the company and its directors/shareholders must have TINs. The company TIN is needed for all contracts, bank accounts, imports, and tax filings. This process is now fully online and straightforward.

⏱ 1–2 days (instant online) 💵 Free 📄 COI, MOA, NID/passport

VAT Registration (BIN) — National Board of Revenue

If annual turnover is expected to exceed BDT 30 lakh (≈ USD 27,000), VAT registration is mandatory. Register at nbr.gov.bd to obtain a Business Identification Number (BIN). Businesses in manufacturing, services, and trade must charge VAT and file monthly returns. Some sectors have specific VAT exemptions.

⏱ 3–5 business days 💵 Free (government registration) 📄 TIN, COI, trade license, bank statement

Trade License from City Corporation / Pourashava

Obtain a Trade License from the local city corporation (e.g., DSCC/DNCC in Dhaka) based on the nature of business and location. This must be renewed annually. The license category (manufacturing, service, general trade) determines the applicable fee structure.

⏱ 3–7 days 💵 BDT 1,000–50,000 annually (depends on business type and area) 📄 COI, TIN, lease agreement, passport photo

Work Permit for Foreign Nationals (BIDA/BOI)

Foreign employees require a Work Permit issued by BIDA. Conditions: the company must employ a minimum of 20 local employees per foreign worker (in EPZs: 5:1 ratio). Sectors like IT allow more flexible ratios. Apply via BIDA One Stop Service (OSS). Duration: typically 2 years, renewable. Note: Visa (E-Visa or Business Visa with employment) is processed separately via the Department of Immigration.

⏱ 4–8 weeks 💵 USD 110–250 per person (govt fee) 📄 BIDA registration, employment contract, org chart

Fire, Environment & Sector-Specific Licences

Depending on your industry: Factory Licence (Department of Inspection for Factories and Establishments — DIFE), Environment Clearance (Department of Environment — DoE), Fire Safety Certificate (Bangladesh Fire Service), Import/Export Registration Certificate (IRC/ERC) from Office of the Chief Controller of Imports & Exports (CCIE), drug/food licences (DGDA/BSTI) if applicable.

⏱ 2–8 weeks (varies) 💵 BDT 5,000–100,000+ depending on sector 📄 Factory plan, environmental assessment, COI

📌 Total Setup Timeline

Simple service company (no factory): approximately 6–10 weeks
Manufacturing company with all sector licences: approximately 3–5 months
EPZ/SEZ company: approximately 6–10 weeks via BEPZA fast-track
Branch or Liaison Office: approximately 4–8 weeks

📖 REAL-WORLD EXAMPLE

Example: A Japanese Electronics Company Setting Up in Dhaka

Week 1–2: Name clearance (3 days) + BIDA registration submission. Week 3–5: RJSC incorporation completed, COI received. Week 5–6: Bank account opened at Standard Chartered Dhaka, USD 200,000 capital remitted, encashment certificate obtained. Week 6–7: TIN and BIN (VAT) registered online. Week 7–8: Trade license obtained from DSCC. Week 9–12: Work permits for 3 Japanese engineers applied. Week 10–14: Import Registration Certificate (IRC) for machinery import. Total cost to fully set up: approximately BDT 3–5 lakh (USD 2,700–4,500) excluding professional fees.

Corporate Tax Structure

Income Tax Ordinance 1984 & Finance Acts — current rates

27.5%

Non-Listed Private Company

Standard corporate income tax rate for privately held companies not listed on the stock exchange. Applicable to most foreign-owned subsidiaries and branch offices.

22.5%

Listed Company (Stock Exchange)

Reduced rate for companies listed on DSE or CSE. Incentive to encourage capital market participation and transparency.

15%

Garment / RMG Sector

Ready-Made Garments (RMG) companies with LEED certification or compliant factories enjoy a concessional 15% rate. Non-compliant RMG: 20%.

10%

IT/ITES Companies

Software, ITES, and offshore outsourcing companies registered with Bangladesh Hi-Tech Park Authority (BHTPA) or Bangladesh Association of Software (BASIS) enjoy 10% tax (or may be fully exempt depending on classification).

EPZ / SEZ Tax Holiday

New investors in EPZs/SEZs: up to 10-year tax holiday (0% corporate tax). Thereafter: 50% exemption for next 3 years. Available for approved industries.

20%

Banks, NBFIs & Insurance

Listed banks: 37.5%. Non-listed banks: 40%. Insurance companies: 37.5%. Merchant banks: 37.5%. (Subject to Finance Act amendments.)

Tax Type	Rate	Filing Deadline	Authority	Notes
Corporate Income Tax	15% – 40% (sector dependent)	Within 6 months of fiscal year end (June 30)	NBR — Income Tax	Tax year: 1 July – 30 June
Withholding Tax (on dividends to foreigners)	20% (or per DTAA)	Within 30 days of payment	NBR	Reduced under Double Tax Avoidance Agreements (DTAAs)
Withholding Tax (on service fees)	10%–15%	Monthly deduction at source	NBR	TDS deducted by payer, deposited to govt treasury
Capital Gains Tax	15% (non-listed); Exempt (listed shares within limits)	With income tax return	NBR	Gains on listed securities may be exempt
Advance Income Tax (AIT on imports)	3%–5% of import value	At the time of import	Customs / NBR	Adjustable against final tax liability
Minimum Tax	0.1%–0.6% of gross receipts	Quarterly advance payments	NBR	Applicable when normal tax falls below minimum

⚠️ Double Tax Avoidance Agreements (DTAAs)

Bangladesh has DTAAs with 36+ countries including USA, UK, Germany, Japan, India, China, Canada, Singapore, and others
Under DTAAs, withholding tax on dividends may be reduced to 10–15% instead of 20%
Tax treaty benefits must be claimed by filing an application and providing tax residency certificate from home country
Contact M A Fazal & Co. to assess your DTAA benefits before structuring your investment

Q1 — July to September

Advance Tax Payment (1st Instalment)

Pay 25% of estimated annual tax liability as advance tax by September 15. Failure attracts interest of 2% per month.

Q2 — October to December

Advance Tax Payment (2nd Instalment)

Pay cumulative 50% of estimated annual tax by December 15.

Q3 — January to March

Advance Tax Payment (3rd Instalment)

Pay cumulative 75% of estimated annual tax by March 15. Review and adjust estimates if actuals differ significantly.

Year-End — July 31 (or later if extended)

Annual Tax Return Filing

Submit audited accounts, tax computation, and return to the relevant tax circle. Extension can be requested from the Deputy Commissioner of Taxes (DCT).

VAT Structure

Value Added Tax & Supplementary Duty — VAT Act 2012

VAT Category	Rate	Examples	Input Credit
Standard Rate	15%	General manufacturing, trading, services, restaurants, consultancy, hotels, advertising	Allowed
Reduced Rate — Services	7.5%	IT-enabled services, English medium schools, beauty parlours, indenting agents, some construction	Partial
Reduced Rate — Services	5%	Certain construction services, transformer manufacturing, some agricultural equipment	Partial
Reduced Rate — Services	10%	Doctors/specialists, certain professional services, air-conditioned restaurants	Partial
Zero Rated (Export)	0%	All export of goods and services — entitled to full input VAT refund	Full Refund
VAT Exempt	Nil	Raw food, agricultural produce, healthcare, non-commercial education, books, public transport	Not Allowed
Turnover Tax (Small Business)	4%	Businesses with turnover BDT 30L – BDT 50L; simplified compliance, no input credit	Not Available

📅

Monthly VAT Return

VAT return (Mushak-9.1) must be filed by the 15th of each following month. Late filing: BDT 10,000 penalty per month. Electronic filing via VAT Online system is now mandatory for most registered businesses.

Mushak-9.1

🧾

VAT Challan (Invoice)

Every VAT-registered business must issue a proper VAT challan (Mushak-6.3) for each supply. The challan must include BIN, customer details, item description, value, and VAT amount. Failure is a VAT offence.

Mushak-6.3

🏗️

Supplementary Duty (SD)

In addition to VAT, Supplementary Duty (SD) applies to luxury goods, tobacco, alcohol, mobile phone services (20%), and certain local products. SD ranges from 10% to 500% on select items. SD is applied before VAT.

Additional Levy

📖 EXAMPLE — VAT CALCULATION

How VAT Works in Practice

A foreign-owned IT company sells software services worth BDT 1,000,000 to a local client.

Output VAT (15% on sales): BDT 150,000
Input VAT paid on office rent, equipment purchase, etc.: BDT 40,000
Net VAT Payable to NBR: BDT 110,000 (filed by 15th of next month)

If the same company exports software internationally (zero-rated), output VAT = 0, but it can claim a refund of the BDT 40,000 input VAT paid — making Bangladesh export-oriented businesses highly VAT-efficient.

Labour Law & HR Compliance

Bangladesh Labour Act 2006 (amended 2013, 2018) — key provisions for employers

Provision	Requirement	Penalty for Non-Compliance
Minimum Wage (Garment)	BDT 12,500/month (≈ USD 105)	Criminal prosecution + back-pay
Working Hours	8 hrs/day, 48 hrs/week max. Overtime: 2 hrs/day max, paid at 2× rate	BDT 5,000–25,000 per violation
Annual Leave	1 day per 18 days worked (≈ 14–18 days/year)	Leave encashment required
Festival Holidays	11 gazetted public holidays (minimum)	Pay for working on holidays: 2× basic
Gratuity	1 month’s last basic salary per year of service (after 5 yrs)	Mandatory on termination/resignation
Provident Fund	Not mandatory, but common. If established: 10% employer + 10% employee contribution	Violation of fund rules: prosecution
Maternity Benefit	16 weeks paid leave (8 weeks pre, 8 weeks post)	BDT 25,000 penalty
Factory Act Registration	Required if 5+ workers in a factory	BDT 25,000 fine, closure order

Priority Sectors for Foreign Investment

High-growth opportunities with government support

👗

Ready-Made Garments (RMG)

World’s 2nd largest apparel exporter. $47B+ annual export. Strong backward linkages. Special GSP+ access to EU markets. Government offers rebates, bonded warehouses, and back-to-back LCs.

Established

💻

IT & Digital Economy

100% tax exemption for IT companies until 2024 (extensions likely). 39 Hi-Tech Parks under development. 650,000+ freelancers. Growing BPO, software, and fintech sectors.

High Growth

⚡

Energy & Power

Bangladesh needs 24,000 MW by 2030. Government actively invites IPPs (Independent Power Producers). Sovereign guarantee on payment. Renewable energy targets ambitious.

Infrastructure

🏥

Healthcare & Pharma

Leading generic pharma exporter. Growing medical device sector. Health tourism potential. Government encouraging hospital investment in Tier-2 cities.

Emerging

🌾

Agro-Processing

Large agricultural base. Growing demand for processed, packaged food. Significant export potential to diaspora markets in UK, USA, Middle East. Cold chain investment incentivised.

Priority

🚢

Logistics & Port Services

Chattogram port expansion, Matarbari deep sea port (in development), Padma Bridge opening new trade corridors. Huge warehousing and 3PL opportunities emerging.