Doing Business in Bangladesh

Doing Business in Bangladesh
Howladar Yunus & Co. Chartered Accountants

February 2012

Howladar Yunus & Co.
Chartered Accountants

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Disclaimer Introduction The Country Forms and Business Enterprises Direct Taxation Exchange Control Other Forms of Taxation Labour Relations and Social Security Grants and Incentives Quality of Life Appendix – A : Rates of Taxes Appendix – B : Rates of Taxes - Companies Appendix – C : RJSC Fees

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Doing Business in Bangladesh 2012

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Howladar Yunus & Co.
Chartered Accountants

2. DISCLAIMER
The content of this book is based on the legislation in operation and information available at the time of publication, which may subsequently have changed. Whilst every care has been taken in its production, no responsibility can be accepted for any action undertaken or refrained from as a consequence of this material. Translation of laws, in the appropriate cases, from Bengali to English in this book has not been authenticated by any competent authority. A great effort was made to ensure literal translation of the lawswhich have been published in Bengali only. However, sometimes the free translation became required to make the issue understandable. Specific professional advice should always be obtained based on personal circumstances or specific case. If there is any contradiction on any issue of this book with that of the official publications or decision of the competent authority of the Bangladesh Government, the later shall prevail. Author accepts no responsibility whatsoever for any action undertaken or refrained from as a result of the information contained herein.

3. INTRODUCTION
Bangladesh is a combination of competitive market, business-friendly environment and cost structure that can give the best returns. Bangladesh offers a well-educated, highly adaptive and industrious workforce with the lowest wages and salaries in the region. 57.30% of the population is under 25, providing a youthful group for recruitment. The country has consistently developed a skilled workforce catering to investors needs. English is widely spoken, making communication easy. Bangladesh is strategically located next to India, China and ASEAN markets. Bangladesh has proved to be an attractive investment location with its 146.6 million population and consistent economic growth leading to strong and growing domestic demand. Energy prices in Bangladesh are the most competitive in the region. Bangladesh offers the most liberal FDI regime in South Asia, allowing 100% foreign equity with unrestricted exit policy, easy remittance of royalty, and repatriation of profits and incomes. Bangladesh offers export-oriented industrial enclaves with infrastructural facilities and logistical support for foreign investors.

Doing Business in Bangladesh 2012

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Machinery and Parts. 4. Business and Universities. Capital is Dhaka and the administrative 7 divisions are Barisal. GEOGRAPHY/STATISTICS Bangladesh is located in the Southern Asia. Bangladesh Bank is both the Government’s banker and the banker’s bank.6 %. bordering the Bay of Bengal with the coastline covering 580 km between Burma & India with the land boundaries 4. Steel and Wheat. Bangladesh Bank. Arable land covered 55. Rangpur and Sylhet. Iron. Christian 0. Garments. Soybean and Palm Oil. exercises monopoly over the issue of currency and the banknotes.The climate of the country is focused as tropical. Jute Goods (including Carpet).570sq km and the total population is 164. a “Lender of the Last Resort”. The financial system also embraces insurance companies. Rajshahi. The Total area is 147. stock exchanges and co-operative banks. The time difference is GMT+6.4. Paper Newsprint.3 %. Out of total population. Chittagong. 4.Howladar Yunus & Co.2. Buddhist 0. 26 March 1971 is the date of independence and 16 December 1971 is known as Victory Day and commemorates the official creation of the state of Bangladesh. Chartered Accountants 4. humid summer (March to June).1. 4.3% and Other 0.): $100 billion. Inflation: 11. The Industries are Textiles. Sugar.3.425. THE COUNTRY 4. Dhaka. Natural resources are Gas. 30 domestic private banks. Jute. Muslim 89. warm rainy monsoon (June to October). per capita $664.5%. Timber and Coal. Khulna. Official language is Bangla (Bengali). ECONOMY The economic position of the country is GDP/PPP (2011 est. Bangladesh imports mostly Petroleum Product and Oil. Cement. mild winter (October to March).053 km.39% and permanent crops covered 3. 4 State Owned Commercial Banks (SCB).08% of total land area. Ceramics and Pharmacy.3%.491. hot. Raw Cotton. Bangladesh exports mainly Ready Made Garments including Knit Wear (75% of exports revenue). Real growth rate: 6%. Doing Business in Bangladesh 2012 Page|4 . Others include: Shrimps. The government type is parliamentary democracy. like most of the central banks of different countries. The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central bank. GOVERNMENT/POLITICS The conventional long form is “People's Republic of Bangladesh” and the conventional short form is “Bangladesh”. Light Engineering. Tea Processing. Chemical Fertilizer. CURRENCY AND BANKING Currency of the country is Bangladeshi Taka (Tk). humid. 5 government owned specialized banks.3%. Hindu 9. 9 foreign banks and 29 non-banking financial institutions. English is widely used in Government. Leather Goods and Tea.246 km where Burma covered 193 km and India covered 4.

1972 as amended from time to time. The British-era legislation applied in Pakistan after 1947 and post-partition legislation enacted in Pakistan continued to form the basis of Bangladeshi personal status laws. The police investigates the cases lodged with the police station and produces witnesses before the court during trial. and also to issue orders and directives in the nature of writs to enforce fundamental rights and to grant other reliefs available under the writ jurisdiction. fiscal laws. There are civil courts presided by Assistant Judge to try the suits of civil nature and criminal courts presided by judicial magistrate to try the criminal cases. To seek remedy a person has to file a case before the appropriate court or authority. The basic law of Bangladesh is the constitution of the People's Republic of Bangladesh. but can make by-laws to the extent authorized by the legislature. election laws. The laws enacted by the legislature and now in operation regulate almost all spheres of life. press laws and laws relating to the remedies. The Courts can be classified into two classes viz. but legal developments since 1972 have been distinct. In addition. Claims regarding money. Constitution adopted 4 November 1972. fifteen amendments to the constitution have been made. and complaint against commission of crime is to be filed either with the local police station or in the criminal court of the magistrate of the first class of the locality. Chartered Accountants 4. The Supreme Court of Bangladesh is the apex court with its two divisions. All laws. service laws. the Supreme Court and. LEGAL SYSTEM Bangladesh seceded from Pakistan in December 1971. Subordinate Courts and Tribunals. Ordinarily executive authorities and statutory corporations cannot make any law. There are other authorities before which remedies may Doing Business in Bangladesh 2012 Page|5 . it is the responsibility of the complainant to produce witnesses before the court in the cases in which magistrates take cognizance on the basis of a written complaint.Howladar Yunus & Co. Such subordinate legislation is known as rules or regulations. commercial laws. All laws of the country are subordinate laws made by the elected Sangsad (the legislature consists of 350 members) conforming to the tenets of the Constitution. Important laws of the country may be classified under some broad heads such as land and property laws. On the other hand. labour and industrial laws. Amended in 1977 to remove principle of secularism included in Part II entitled Fundamental Principles of State Policy. After the emergence of Bangladesh in 1971. personal laws. rules or regulations made by the competent authority are applied in the Courts and Tribunals. law of crimes. such rules or regulations are also enforceable by the court like the laws made by the legislature. a rigid constitution has been adopted which came into force on 16 December 1972. Till 2010. As the apex court the high court division has been vested with the power to hear appeals and revisions from subordinate courts. there are various other laws on different subjects regulating different fields and spheres of activities of national life. property. compensation etc is to be filed before the civil court presided over by the assistant judge or subordinate judge according to value of the claim.5. the High Court Division and the Appellate Division. Unless found ultra vires of the parent law.

admiralty. To try offences committed by children below the age of 16 years. Doing Business in Bangladesh 2012 Page|6 . special judges to try corruption cases against public servants. and juvenile courts follow the special procedure laid down in the children's Act. For example. One of the notable features of the legal system of Bangladesh is that the legislature can enact any special law for any particular purpose and thereby can form special courts or tribunals.Howladar Yunus & Co. Chartered Accountants be sought by an aggrieved party. and insolvency courts have been set up presided over by district or additional district Judges to declare defaulting borrowers as insolvent. special tribunals to try criminal cases under the Special Power Act 1974 and Nari-o-ShishuNirjatan Daman Adalats to decide cases of crimes committed against children and women. custom. juvenile courts have been formed with the magistrates and sessions judges. company matters and writ petitions. there are labour courts and labour appellate tribunals to decide labour disputes. Family courts have been constituted with assistant judges to decide family disputes. To decide election disputes the election tribunals are constituted with judicial officers. court of settlement to decide disputes about abandoned properties. income tax appellate tribunal to decide income tax disputes. Except in respect of enforcement of fundamental rights. excise and VAT Appellate tribunal to decide disputes regarding custom and excise duties and VAT. To decide money claims of the banks and other financial institutions ArthaRinAdalats have been set up presided over by judges. relief cannot be sought directly from the high court division which mainly deals with appeals and revisions from the decisions of the subordinate courts. administrative tribunals and administrative appellate tribunal to decide service disputes of public servants. Those authorities are administrative authorities or tribunals.

known alternatively as sole tradership. FORMS OF BUSINESS ENTERPRISE 5. partnership and limited company. local investor you may setup a business under several organizational structures such as single proprietorship. books. one may establish its business only under limited company. The sole trader bears unlimited liability. General Requirements to Start a Sole Proprietorship Business:  Trade License from City Corporation/Municipality/Union Council (Local Government Bodies). confectioneries. In the case of a foreign investor. spare parts. freedom in keeping liability to certain limits. Principle Legislation All the laws related to an individual are applicable to a sole proprietorship. road. the proprietor is to take all risks. Some of the favourable characteristics of a sole proprietorship business are the ease of initiation. A sole trader-ship business has no legal identity other than that of its owner. Chartered Accountants 5. medicines. liberty in making quick decisions and the like.1. handicrafts. ease of winding up. and tyre/tube. groceries. low cost of commencement. and service marketing such as hotels. SOLE PROPRIETORSHIP Definition In the sole proprietorship. Doing Business in Bangladesh 2012 Page|7 . Sole trader-ships in Bangladesh are usually classified as small. guesthouses or tailoring. restaurants.Howladar Yunus & Co. Many operate amusement business. medium and large depending on the size of capital employed. and water transportation. cloth.        Taxpayer’s Identification Number (TIN) VAT Registration (in the cases where applicable) IRC (in the case of business related to import) ERC (in the case of business related to export) License/Permission from the authorities according to the nature of business/profession Bank Account Membership of Trade Body As per publication of Board of Investment (BOI). right to control. wholesale stores. Most sole proprietors conduct small businesses such as retail shops that sell stationary. hair dressing. minimum legal restrictions.

and drawings on account of profit. A non-profit making association is not a partnership in law of Bangladesh. between the partners. term of partnership. provision for accounts and audit. the non-registration of a firm does not affect the right of an unregistered firm to bring a suit to enforce a right arising otherwise than out of a contract and the power of an official assignee or receiver to realise the property of an insolvent partner. and an arbitration clause.  Taxpayer’s Identification Number (TIN)  VAT Registration (in the cases where applicable)  IRC (in the case of business related to import)  ERC (in the case of business related to export)  License/Permission from the authorities according to the nature of business/profession  Bank Account Doing Business in Bangladesh 2012 Page|8 . powers of admission and expulsion of a partner. or take other legal proceedings. the capital and property of the firm. The Partnership Act 1932 does not require a partnership deed or agreement to be registered. division of profits and losses (capital and revenue). Principle Legislation  The Partnership Act.Howladar Yunus & Co. expressed or implied. termination of agreement by insolvency. PARTNERSHIP FIRM Description Partnership Business a form of business organization created through voluntary agreements of minimum two and maximum 20 persons (the maximum is 10 in the case of banking business). In general. In Bangladesh. provision for salaries. rights and duties of individual partners. If a partnership business is not registered. a partnership is illegal if it consists of more than 20 persons in case of a general business and more than 10 persons in case of business in banking.. However. Also. nature of business. But if registered. an unregistered firm can not file a suit. valuation of goodwill and share of assets on sale or death. General Requirements to Start a Partnership Business:  The Partnership Deed. The registration of such firm is optional. a partner of the firm can not bring a suit to enforce a right arising from a contract or conferred by the Partnership Act against the firm or his co-partners.  Minutes of Partners’ Meeting. 1932. rate of interest (if any) on partners' capital. to enforce a right from a contract. or to claim a set-off in any suit filed against it. with the intention of making and sharing profits among themselves. By definition. institutions or associations cannot be a member of a partnership. the capital of individual partners. death.  Trade License from City Corporation/Municipality/Union Council (Local Government Bodies). advances and drawings.2. etc. a partnership firm is to be formed under the provisions of the Partnership Act 1932. A partnership deed includes the name of the firm. Chartered Accountants 5. A partnership can arise only as a result of an agreement or contract. a partnership firm can enjoy some legal rights and facilities.

5. Thus. 5. Chartered Accountants  Membership of Trade Body As per publication of Board of Investment (BOI). Generally. BRANCHE/LIASION/REPRESENTATIVE OF FOREIGN COMPANIES Description A company expands its business by opening up its branch offices in various parts of the domestic country as well as in other countries. The Companies Act.3. one may establish its business only under limited company. these offices help to fuel the growth of the company and enhance its profitability on a sustained basis. The Foreign Exchange Regulation Act. Principal Legislation     The Investment Board Act. 1989. Limited Partnership Firm in Bangladesh is not realistically available. The Branch/Liaison/Representative office of a foreign entity shall have to be submitted income tax return to the competent income tax authority of Bangladesh. LIMITED PARTNERSHIP FIRM In Bangladesh. Such offices shall have to bring inward remittance at least USD 50. The activities of Branch/Liaison/Representative office of a foreign entity shall remain confined to those as set forth in the permission of BOI. In the case of a foreign investor. local investor you may setup a business under several organizational structures such as single proprietorship. Rues & Regulations of Board of Investment (BOI).000 within 2 (tow) months from the date of the issue permission letter as establishment cost and 6 months operational expenses. no outward remittance of any kind from Bangladesh sources by the said offices is allowed except the cases permitted by the foreign exchange regulations. Branch offices help in expanding the size of the market for a company's product by attracting more customers. 1947 Doing Business in Bangladesh 2012 Page|9 .Howladar Yunus & Co. government of Bangladesh. 1994. Security clearance is required to be obtained from Ministry of Home. The said offices shall strictly follow the foreign exchange regulations of the government of Bangladesh. A branch office refers to an establishment which carries on substantially the same business and activity as is carried out by its Head Office.4. widening the scope of its trading and manufacturing activities as well as bringing more opportunities and opening unexplored avenues for it. partnership and limited company.

companies. deliver to the Registrar of RJSC for registration-(a) a certified copy of the charter or statues or memorandum and articles of the company or other instrument constitution or defining the constitution of the company. Doing Business in Bangladesh 2012 P a g e | 10 . Certificate of Incorporation.Howladar Yunus & Co. NOC from Bangladesh Bank etc. An investor can change the address of a Branch Office/Liaison Office/Representative Office in Bangladesh by an application with certified copy of rent deed and board resolution supported by a treasury chalan of specific amount. Bangladesh Bank (BB) Afterwards. Chartered Accountants General Requirements to Open Branch/Liaison/Representative Office of Foreign Companies: Foreign companies not registered in Bangladesh can set up a place of business in Bangladesh in the form of a Branch Office or a Liaison Office. within one month of the establishment of the place of business. duly filled in. Registrar of Joint Stock Companies (RJSC) Foreign Combines which establishes a place of business in Bangladesh shall. List of activities of the proposed office All papers/documents must be attested by the Bangladesh Embassy/High Commission of the country of origin. Board of Investment (BOI) Permission will be required from the BOI in order to open up a Branch Office and shall submit application in the prescribed form along with the following documents:         Prescribed Application From. Memorandum of Association (MOA) and Articles of Association (AOA) of the Principal Company. For to waiver the condition of BOI Branch Office/Liaison Office/Representative Office the company have to apply for the specific condition to waive in BOI. updated tax payment certificate. firms under Section 18B of the Foreign Exchange Regulation Act. and required formalities with RJSC shall have to be performed. Audited Accounts of the last financial year. Board Resolution to open a Branch/Liaison/Representative Office in Bangladesh. Embassy/High Commission of the applicant's country of origin or Apex Chamber of Commerce of the country of origin. and if the instrument is not written in Beguile or English Language. a certified Penally or English translation thereof. (b) the full address of the registered or principal office of the company. 1947. Name and Nationalities of the Directors/Promoters of the Principal Company. An investor can close a Branch Office/Liaison Office/ Representative Office in Bangladesh by an application with audit report. signed and stamped. permission is sought from Bangladesh Bank for opening branch/liaison Office in Bangladesh by foreign entities including airlines. Proposed organogram of the office.

LIMITED COMPANIES Description Limited company is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. ii. Doing Business in Bangladesh 2012 P a g e | 11 . authorized to accept on behalf of the company service of p[process and any notice or other document required to be served on the company. may be further divided into public companies and private companies. 5.5.    Limits the number of its members to minimum 2 and maximum 50 excluding the persons employed in the company. 1969 and the Securities and Exchange Commission Act.Howladar Yunus & Co. (e) the full address of the office of the company in Bangladesh which to be deemed its principal place of business in Bangladesh. Business in Bangladesh may be carried on by a company formed and incorporated locally or by a company incorporated abroad but registered in Bangladesh. (d) the name and address or the names and addresses of one or more persons resident in Bangladesh. c. Company Limited by Shares i. The incorporation or registration is done by the Registrar of Joint Stock Companies and Firms under the provisions of the Company's Act 1994. And the former of these. a limited company limited by shares. of the company. Public Limited Company:  May issue invitation to the members of the public to subscribe the shares and debentures of the company through a prospectus which complies with the requirements of the Companies' Act 1994. Company Limited by Guarantees. Unlimited Company Private Limited Company:  Restricts the rights to transfer the shares. Chartered Accountants (c) a list of the directors and secretary. the Securities and Exchange Ordinance. if any. Prohibits any invitation to the public to subscribe for the shares or debentures of the company and Entitles to commence business from the date of its incorporation. 1993 as amended from time to time. Limited companies may be limited by shares or by guarantee. Public Limited Company and Private Limited Company b. Companies could be classified in following categories: a.

whether it is public or private limited and the location of the registered office at the company. The Foreign Exchange Regulation Act. An application in plain paper along with nominal required fees is be submitted to the RJSRF for verification and clearance of the proposed name.  Articles of Association (AOA): The AOA are the regulations governing the internal management of the affairs of the company and the conduct of its business.   The Securities and Exchange Ordinance. The act is primarily to regulate working conditions and to ensure safety in the factory. the divisions of this capital into shares of fixed amount and liability of its members. Chief Inspector of Factories and Establishment Any manufacturing company employing 10 (ten) or more workers is required to be registered under the Labour Act. Chartered Accountants    Has minimum 7 members but there is no maximum limit. promoters have to undertake activities in following steps:  Selection of the Company Name: The name should not be identical with or closely resemble to the name of an existing company. The MOA should clearly spell out the main objectives. Unlimited Company: An unlimited company refers to a company having no limit on the liability of its members. Doing Business in Bangladesh 2012 P a g e | 12 . 2006 with the office of the Chief Inspector of Factories and Establishment. the authorized capital. General Requirements to Set Up a Company: Registrar of Joint Stock of Companies and Firms (RJSC) To register a company with the Register of Joint Stock Companies and Firms.Howladar Yunus & Co. 1969. 994. 1947. These articles are subordinate to and controlled by MOA. May a private company converted into a public company.  Registration Application: Prescribed Application Form for registration has to be filled in. signed and submitted to the Registrar of the Joint Stock Companies and Firms.  Memorandum of Association (MOA): MOA states the name of the company. Principal Legislation  The Companies Act. Has at least 3 Directors.

the minimum and maximum number of trustees has to be specified. “Registered” means registered under the law for the registration of documents for the time being in force.Howladar Yunus & Co. The subject-matter of the trust is called “Trustproperty” or “Trust-money”. is called a “Breach of trust” And in the Trust Act. by any law for the time being in force. The trust deed should clearly spell out the aims and objects of the trust. by which the trust is declared is called the “instrument of trust”. and the instrument. The person for whose benefit the confidence is accepted is called the “Beneficiary”. the value of which would depend on the valuation of the trust property. TRUSTS Description A “Trust” is an obligation annexed to the ownership of property. Chartered Accountants Registration with Board of Investment  Application Form          Trade License Limited Company : Certificate of Incorporation Memorandum and Articles of Association Name and address of other shareholder/director(s) of the project Additional documents for projects in certain sectors Copy of rental agreement or lease deed for premises or land purchase document TIN Certificate Registration Fee (Bank Draft) 5. or of another and the owner The person who reposes or declares the confidence is called the “Author of the Trust”. 1882. as such.6. The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses. how other trustees may be appointed or removed. The main instrument of any public charitable trust is the trust deed. wherein the aims and objects and mode of management (of the trust) should be enshrined. A breach of any duty imposed on a trustee. The trust deed should be executed on non-judicial stamp paper. The “Beneficial interest” or “Interest” of the beneficiary is his right against the trustee as owner of the trust-property. if any. etc. The person who accepts the confidence is called the “Trustee”. Doing Business in Bangladesh 2012 P a g e | 13 . The salient features of Trust are as follows:     In every trust deed. or declared and accepted by him. for the benefit of another. how the trust should be managed. unless there be something repugnant in the subject or context. and arising out of a confidence reposed in and accepted by the owner.

depending on the value of the trust property. There are other types of companies such as JV limited by guarantee. joint ventures limited by guarantee with partners holding shares. 1989. They exercise control over the enterprise and consequently share revenues. the applicant has to affix a court fee stamp of specified amount. The Investment Board Act. 5. 1882. 1980 General Requirements to Set Up a Joint Venture:     Joint venture agreement Application Form Trade License Limited Company : P a g e | 14 Doing Business in Bangladesh 2012 . 1994. names of trustees. 1908. together with a copy of the trust deed. Principal Legislation    The Companies Act. General Requirements to Set Up a Trust:   The application for registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.. a new entity and new assets by contributing equity. mode of succession. The Foreign Investment Promotion and Protection Act.7. Chartered Accountants Principal Legislation     The Trust Act. The application form should be submitted. etc. The Registration Act. 1860.  Two other documents which should be submitted at the time of making an application for registration are affidavit and consent letter. for a finite time. expenses and assets.Howladar Yunus & Co. After providing details (in the form) regarding designation by which the public trust shall be known. 1994.  The application form should be signed by the applicant before the regional officer or superintendent of the regional office of the charity commissioner or a notary. The Companies Act. The Societies Registration Act. JOINT VENTURES Description Joint venture (JV) is a business agreement in which parties agrees to develop.

Recommendation for import of machinery and raw materials. Availability of land for the industrial uses The land use for the industries can be as under: a) Export processing zones (EPZ): The land in the EPZ enclaves is allotted by the EPZ authority. Remittance of Royalty. BOI provides following Specific facilities and comprehensive services:        Industrial Registration Recommend for Industrial Plot (if available)/ in any designated industrial area other than BSCIC & BEPZA Recommend for utility connections Recommendation for Foreign Loan. Issue of work permit. Remittance of the equity. Suppliers' Credit. The equity that is brought in is allowed to repatriate from the country with the dividend earned. The royalty and technical assistance can also be remitted based on the documents and criteria fixed by the government. BOI can request the Doing Business in Bangladesh 2012 P a g e | 15 . deferred payment. Chartered Accountants        Certificate of Incorporation Memorandum and Articles of Association Name and address of other shareholder/director(s) of the project Additional documents for projects in certain sectors Copy of rental agreement or lease deed for premises or land purchase document TIN Certificate Registration Fee (Bank Draft) POST-INVESTMENT SERVICES BY BOI Once the investor decides to invest and forms a company. He can mention for certain land in a district (regional centre) and can sought support of BOI.Howladar Yunus & Co. Technical Know-How and Technical Assistance Fees Protection of Foreign Investment  The Foreign Private Investment (Promotion and Protection Act 1980) and bilateral investment treaties ensures the protection of investment form expropriation in Bangladesh. c) Govt. etc. b) Private lands: The private lands can be scouted by the investors itself. dividend and royalty technical assistance  The equity can be remitted while the company decided to exit the country. A foreign company can own land in its name. owned land: The investor can seek for Govt. The dividend earned each year can be remitted based on the necessary documentation and approval. PAYE Scheme. owned land (khas land).

Registration with Factories Act. Chartered Accountants respective Deputy Commissioner (DC). Self-financed local investment proposals including industries sanctioned/financed by financial institutions or commercial banks. 100% Foreign Investment in a Business 100% foreign equity may be allowed in all areas of investment under Companies Act 1994. Suppliers’ Credit. Plant Setup. Remittance of Royalty.. Securing Trade License. Registration with Environmental Legislation. Technical Know-How and Technical Assistance Fees. Obtaining Utility Connection Import of Spare Parts and Raw & Packaging Materials. STEPS TO START A JOINT VENTURE IN BANGLADESH                 Joint Venture Agreement between the parties Company Formation or Establishing Place of Business Opening Liaison/Branch/Representative Office. Commercial Operation Doing Business in Bangladesh 2012 P a g e | 16 . Registering with BOI. BOI approval/registration for commercial enterprises For commercial enterprises BOI approval/registration is not needed. who is the administrative head of the district. PAYE Scheme etc. Obtaining Work Permit. for providing that land. Obtaining Industrial Plot. They must register under concern law and proper authority.Howladar Yunus & Co. However. Permission for setting up joint venture industrial units with public sector corporations. Joint Venture and 100% Foreign Investment proposal in the Private Sector. Registration/Approval for Foreign Loan. Private investment (local as well as foreign) is restricted in four sectors on strategic grounds as mentioned in the Industrial Policy-2010.

and cultural needs and aspirations through jointly owned and democratically controlled enterprise". This Division is responsible for policy formulation. Doing Business in Bangladesh 2012 P a g e | 17 . social. To uplift the status of the poor people living in the rural areas. RDCD is also assigned to coordinate the activities pertaining to rural development undertaken by other Ministries and provide policy guidelines to the RDA and BARD are serving the policy guidelines and formulating recommendations related to poverty reduction strategies through their symbiotic research and actionresearch programs. A cooperative may also be defined as a business owned and controlled equally by the people who use its services or by the people who work there. CO-OPERATIVES Description Co-operative is a business organization owned and operated by a group of individuals for their mutual benefit. monitoring and administration of rural development and cooperative initiatives of the country. Principal Legislation   The Cooperative Societies Act.8. 2004 General Requirements to Set Up a Society:     Bye-laws and Deed of Cooperative Society Application in the prescribed form to the Registrar of Co-operative Societies The registration of a cooperative society is subject to satisfaction of the Registrar of the Cooperative Societies (RCS). A cooperative can also be defined as "an autonomous association of persons united voluntarily to meet their common economic. Various aspects regarding cooperative enterprise are the focus of study in the field of cooperative economics. The Cooperative Societies Rules. Rural Development and Cooperatives. planning. Chartered Accountants 5.Howladar Yunus & Co. 2001. For banking and unlimited liability cooperatives some financial conditions have been imposed. the government of Bangladesh set up the Rural Development and Cooperative Division ( RDCD ) under the Ministry of Local Government.

A Company is obliged to submit income tax return by fifteenth day of July next following the income year or. 1. INCOME TAX – INDIVIDUALS/SOLE PROPRIETORSHIP/PARTNERSHIP FIRM Income tax is imposed on the basis of ability to pay. where the fifteenth day of July falls before the expiry of six months from the end of the income year. For returns submitted under Universal Self-Assessment Scheme. Otherwise. Consequences of Non-Submission of Return   Imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. Assessment Procedures:   For a return submitted under normal scheme. a Non-Resident shall not be entitled to any sort of tax rebate like investment tax rebates etc. Moreover. Tax is levied on income but taxability of a person is determined on the basis of his residential status.000/In case of a continuing default a further penalty of Tk. although some firms may qualify for a tax holiday in the initial years after entering Bangladesh. Chartered Accountants 6.Howladar Yunus & Co. Anyone stays in the taxable territory for 182 days or more in the income year or 365 days at a time or consecutively within 04 years immediately before the income year just preceding the assessment year plus a minimum of 90 days in the income year. The last date for submission of income tax return. INCOME TAX – COMPANIES No distinction is made for the purposes of corporate income tax between foreign owned companies and Bangladeshi-owned companies. a non-resident. The more a taxpayer earns the more he should pay''.2.1. before the expiry of such six months.is the basic principle of charging income tax. the acknowledgement slip is determined to be an assessment order. by the thirtieth day of September next following the income year. Return filed under Universal Self -Assessment is of course subject to audit. Doing Business in Bangladesh 2012 P a g e | 18 . assessment is made after hearing. 50/.for every day of delay. unless extended by competent tax authority. shall be deemed to be resident. 6. DIRECT TAXATION 6. Non-resident except a Bangladeshi non-resident has to pay tax at the maximum rate of 25% irrespective of total income.

Howladar Yunus & Co. Chartered Accountants 6.4. Every company is required to file a returnof withholding tax so collected or deducted in each quarter.if the capital assets disposed after five years. portfolio management company. leasing company. or tax at the rate of fifteen per cent on the amount of the capital gains whichever is the lower. TAX ON CAPITAL GAINS Capital Gain from the Transfer of Listed Shares  Capital gains arising on the sale or transfer of non-government securities. financial institution. 6. shareholder or director of a bank. In the case of a person other than a company. Salient Features of Withholding Tax:   Chapter VII (Payment of Tax Before Assessment Section).   Capital gainshall be taxed @ 10% in the case of capital gain earned by a Company. Capital Gain from the Transfer of Other Capital Assets    In the case of a company. WITHHOLDING TAXES In Bangladesh withholding taxes are usually termed as Tax deduction and collection at source. particularly Sections from 48 to 56. provides for the income from which tax shall be deducted or collected at source. stock dealer or stock broker company. tax payable on the capital gains at the rate applicable to his total income including the said capital gains.  Capital gain earned by a shareholder who holds shares more than 10% in the listed company at any time during the income year shall be taxed @ 5%. tax at the rate of fifteen per cent on the Capital Gain. In the case of a person other than a company. Under this system both private and public limited companies are legally authorized and bound to withhold taxes at some point of making payment and deposit the same to the Government Exchequer. insurance company. Tax shall be imposed on Capital gain@ 5% if the transferor is a sponsor. The taxpayer receives a certificate from the withholding agent and gets credits of tax against assessed tax demand on production of the certificate. This system is considered as an important mechanism of tax collection. merchant bank.if the capital assets disposed after not more than five years.capital gain shall be included in the total income and will be taxed accordingly.3. including stock and shares of public companies listed on the Bangladesh stock exchanges are exempted from income tax in the case of individual. Doing Business in Bangladesh 2012 P a g e | 19 .

TAXATION OF FOREIGN ENTERPRISES AND OPERATIONS There are no specific tax benefits for foreign companies and operations on Bangladesh. Chartered Accountants  In the event of failure to deduct. All sums deducted or collected shall be paid to the credit of the Government within 3 (three) weeks from the date of such deduction or collection. or failure fails to pay the tax so deducted or collected. 6. the Bangladesh authorities have not imposed death duties or estate duties. 6. No deduction on account of allowance from income from business or profession shall be admissible in respect of any payment made by an assessee to any person if tax and VAT. 6. collect or pay.Howladar Yunus & Co.7. GIFTS TAX In Bangladesh. may be exposed to a penalty of a sum not exceeding the amount in arrear. Tax rates will be applicable as local company’s tax rate.    An assessee is in default or is deemed to be in default in making payment of tax. DEATH DUTIES Currently. there are no specified tax regulations on Gifts tax.5. Doing Business in Bangladesh 2012 P a g e | 20 . the person shall be deemed to be an assessee in default and pay an amount at the rate of 2% per month.6.

The declaration symbolized a turning point in the country’s exchange management and exchange rate systems. Doing Business in Bangladesh 2012 P a g e | 21 . Investment in Bangladesh: With the exception of a few reserved sectors. yet-to-be-listed public issues of Bangladeshi shares/securities. 5% shares of Initial Public Offering (IPO) of a company is reserved for NonResident Bangladeshi (NRB). In such cases investors are not required to transact through any registered broker/member of stock exchange. No permission is needed to set up such enterprises if the entrepreneurs use their own funds. For issuance of shares against foreign investment in the form of capital machinery. foreign investors are free to make investments in Bangladesh in industrial enterprise.Howladar Yunus & Co. Shares may be issued in favour of foreign investors against capital machinery brought into Bangladesh. They may also invest in new. However. entrepreneurs/sponsors are advised to apply for registration with the Board of Investment (BOI). EXCHANGE CONTROLS On March 24. invoice and bill of lading are required.   Permission of Bangladesh Bank is not required for issue and transfer of shares in favour of nonresidents against their investments in joint ventures in Bangladesh. Chartered Accountants 7. The period preceding this declaration saw an intensification of reforms undertaken by Bangladesh Bank to ease controls on foreign payments and exchange rate arrangements. Investment in shares/securities by non-residents:   Non-residents are free to invest in shares / securities quoted in the stock exchanges. with foreign exchange sent or brought into Bangladesh. copies of the relative import permit. the office of the Chief Controller of Imports & Exports (CCI & E) prescribes the basis and conditions of import entitlement. to avail of facilities and institutional suport provided by the government. the exchange control copy of bill of entry evidencing clearance of the capital machinery from the Custom Authorities. For items in the control list. These reforms and the subsequent further changes have been summarized in the following paragraphs. Non-Resident Bangladeshi (NRB) can purchase/subscribe securities in foreign currency through "Foreign Currency Account for IPO" opened for the purpose only by the issuing company. An industrial entity may be set up in collaboration with local investors or may even be wholly owned by the foreign investors. 1994 the Bangladesh Taka was declared convertible for current account transactions in terms of Article VIII of the IMF Articles of Agreement. Non-resident share holders can freely transfer their shares to other non-residents. Over subscription can be repatriated after completion of formalities.

or (b) 6% of the cost of imported machinery in the case of new projects. Remittance of dividend/capital gain: Prior permission of Bangladesh Bank is not required for:    remittance of dividend income to non-residents in respect to their investments in Bangladesh. courier service companies: Foreign shipping lines. remittance of dividend declared out of previous year's accumulated reserves. Agreements not in conformity with these general guidelines require prior permission of the BOI. funds collected in Bangladesh towards freight and passage. Doing Business in Bangladesh 2012 P a g e | 22 . and dividend and sale proceeds (including capital gains) of shares of companies listed in a Stock Exchange in Bangladesh. technical know-how/technical assistance fees payable as per agreements registered with/approved by BOI. which is accorded for amounts not exceeding the net asset values of the shares. without prior approval of Bangladesh Bank. if any.Howladar Yunus & Co. however. airlines and courier service companies may send abroad. insurance companies and financial institutions are free to remit their post-tax profits to their head offices through banks authorized to deal in foreign exchange (Authorized Dealers) without prior approval of Bangladesh Bank. Remittance by shipping lines. Remittance of royalty/technical fees: Industrial enterprises may enter into agreements for payment of royalties. airlines. after adjustment of local costs and taxes. ADs may remit the royalties. Such remittance may be effected prior to actual payment of taxes provided that the amount payable to the tax authorities at the applicable tax rate is withheld by the company. through an AD. technical knowhow/technical assistance fees abroad without prior permission if the total fees and other expenses connected with technology transfer do not exceed (a) 6% of the previous year’s sales of the enterprises as declared in their tax returns. Remittance on account of training and consultancy: Industrial enterprises producing for the local market may remit through ADs up to 1% of their sales as declared in their previous year's tax returns for the purpose of training and consultancy services without prior approval of Bangladesh Bank. need to be registered with the Board of Investment (BOI). Remittance of sale proceeds of shares of companies not listed in Stock Exchange requires prior Bangladesh Bank permission. Chartered Accountants Remittance of profits: Branches of foreign firms/companies including foreign banks. These agreements.

 Retention Quota for merchandise exporters: Merchandise exporters may retain up to 50% of realised FOB value of their exports in foreign currency accounts in US$. foreign or joint venture) may borrow abroad with prior Board of Investment (BOI) approval. retain the foreign currency in interest bearing renewable term Doing Business in Bangladesh 2012 P a g e | 23 . Bonafide requirement beyond US $ 6000 is accommodated by Bangladesh Bank upon written request submitted with supporting documentation. For export items with high import contents (such as naptha. without reference to Bangladesh Bank Banks in Bangladesh are free to grant local currency loans to joint venture industries in EPZ up to the amount of short term foreign currency loans obtained from abroad. import of raw materials.Howladar Yunus & Co. Remittances towards payment of interest and repayment of principal as per terms of BOI approved borrowing may be made through ADs without prior Bangladesh Bank approval. at their option. and also for import of control list items as per general or specific authorization of the office of the Chief Controller of Imports and Exports. Exchange Facilities for Exporters  New Exporters: Annual foreign exchange quota for business travel abroad for new exporters has been set at US $ 6000. Euro. Japanese Yen. readymade garments etc. bitumen. furnace oil. Convertibility on Trade Account Bangladesh Taka is fully convertible for settlements of trade related transactions. Exporters may. Import licence is not required for import of items not in the control list. such as business visits abroad.  Local borrowings: Banks in Bangladesh may extend working capital loans or term loans in local currency to foreigncontrolled or foreign-owned firms/companies (manufacturing or non-manufacturing) operating in Bangladesh on the basis of normal banker-customer relationship. Funds from these accounts may be used to meet bonafide business expenses. the retention quota is 10%. An importer has automatic access to foreign exchange for import of all items outside the control list. participation in export fairs and seminars. The computer software and data entry/processing service exporters may also retain up to 50% of realised export proceeds in foreign currency accounts.). Chartered Accountants Foreign and Local Borrowings  Foreign loans: Industrial enterprises in Bangladesh (local. machineries and spares etc. Funds from these accounts may also be used to set up offices abroad without prior permission of Bangladesh Bank.

quality claim.. This quota may also be kept in interest bearing renewable term deposit accounts. partial shipment etc. remittance of premia on account of re-insurance.Howladar Yunus & Co. issue of bank guarantee/performance bond on account of the merchandise exporters of Bangladesh in favour of foreign buyers. Chartered Accountants deposit accounts in Bangladesh with a minimum amount of USD 2. remittance of pre-shipment inspection fees. remittance of bonafide expenses incurred by Bangladesh Biman and Bangladesh Shipping Corporation in foreign ports/stations. However. remittance of royalty/honoraria/fees to non-residents including foreign news agencies for features. payment of discount not exceeding 10% of the invoice value at the request of the exporter where foreign importers refuse to clear goods due to discrepant documents etc. Doing Business in Bangladesh 2012 P a g e | 24 . Funds may be drawn from these accounts to meet expenses for bonafide business expenses abroad. remittance on account of short weight.500 equivalent. remittance of purchase price of ships acquired by private firms/companies. Commercial Remittances Prior permission of Bangladesh Bank is not required by the ADs for:              opening back-to-back import LCs on account of manufacture-exporters for their input imports as per prescribed input-output coefficients. remittance of “General Average” collected from consignees in Bangladesh. foreign exchange earnings on account of indenting commission or agency commission for export from Bangladesh may not be credited to such accounts since these incomes originate from Bangladesh sources. remittance on account of charter hire of foreign ships. advertising of Bangladeshi commodities in mass media abroad. remittance of premia on foreign currency policies taken by Bangladesh nationals while residing abroad. upto 10% of realised export proceeds. subscribed by local newspapers/magazines.  Retention quota for service exporters: Service exporters may retain 5% of their repatriated income in foreign currency accounts. articles etc.000 or Pound Sterling 1.

term loan can not exceeds 50% of the paid up capital.6 million Bangladeshi migrants. REPATRIATION OF EARNINGS AND ROYALTY PAYMENTS 7.17 billion in the year 2011. branch/liaison/representative office of foreign origin and also local commercial enterprises desiring to employ foreign nationals are required to apply in the prescribed form obtainable from BOI. RESTRICTIONS ON AMOUNTS THAT CAN BE TAKEN OUT OF THE COUNTRY 7.4. approximately 12 percent of GDP in Bangladesh. 80 percent of whom working in the oil-rich Middle East.5. in case of 100% foreign owned companies.Howladar Yunus & Co. the outflow of migrant workers surged 45 percent to a two-year high at 568.7 million workers to over 140 countries during a period of more than three decades since the mid-1970s. IMMIGRANTS Bangladesh has sent more than 6. CONTRACT WORKERS/TEMPORARY RESIDENTS Work Permit Work permit for foreign nationals is required for employment in Bangladesh. For expatriate employment the guidelines are as follows:  Nationals of the countries recognized by Bangladesh are considered for employment. 7. the remittance transfers received from thesemigrant have reached a phenomenal level of over 10 billion US dollar in 2009. P a g e | 25 Doing Business in Bangladesh 2012 . Chartered Accountants 7. Most of these workers temporarily migrate to work in Middle East and Southeast Asia. LOCAL BORROWING Bank may extend working capital loan or term loan in local currency to foreign controlled or foreign owned firm/ companies (manufacturing or non-manufacturing) operating in Bangladesh. 7. Key Middle East countries need more foreign workers now as they are taking more development projects. This mass movement of temporary migrant workers has.3. However. More importantly. to some extent. Private sector industrial enterprises (outside EPZ). offering the government a much-needed cushion against dwindling foreign exchange reserves and exchange rate volatility. eased unemployment pressures on the over-burdened labor market in this highly populated country.2. The latest growth in remittances comes as more workers are joining the bandwagon of more than 7. Remittances grew 10 percent in 2011 from the previous year. inspired by high oil prices at around $100 a barrel.000 due to opening of new jobs.1. During 2011. Remittance inflows hit a decade high of $12.

Prescribed application form has to be collected from BOI or may be be downloaded from BOI website www. Remittance of salaries and savings by expatriates: Expatriates working in Bangladesh with the approval of the Government may remit through an Authorized Dealer (AD) 50% of salary and 100% of leave salary as also actual savings and admissible pension benefits.  Furthermore. Employment of foreign nationals is normally considered for the job for which local experts / technicians are not available and persons below 18 years of age are not eligible for employment. the expatriate investors and employee must arrive in Bangladesh with ‘PI’ and ‘E’ types’ visa respectively obtainable from concerned Bangladesh Mission in abroad. Initially employment of any foreign national is considered for a term of one year which may be extended on the basis of merit of the case.boibd.org.   Application for Expatriate Work Permit must be submitted to BOI within 15 (fifteen) days from the date of arrival. Doing Business in Bangladesh 2012 P a g e | 26 . Decision of the Board of Directors of the concerned company for new employment/ extension has to be furnished. Chartered Accountants      Employment of expatriate personnel is considered only in industrial establishments and commercial enterprises duty sanctioned / registered by the appropriate authority.000 for investment in joint venture by the Foreign Shareholders.  For obtaining new Work Permit. if that joint venture asks for work permit in favor of its expatriate employees. Number of the expatriate employees in an industrial enterprise should not exceed 1:20 (foreign: local) ratio at any time during regular production and the ratio for commercial enterprises be 1:5 (foreign: local). No prior Bangladesh Bank approval is necessary for such remittances.Howladar Yunus & Co. Necessary security clearance has to be obtained from the Ministry of Home Affairs after issuance of work Permit and the duration of visa should be extended upto the period of Work Permit. BOI imposes a ceiling of USD 50.

manufacturing.3. 1899 and Stamp Manual.Howladar Yunus & Co. Exemption of VAT or imposition of VAT @0% is regulated by Section 3 (Export or Deemed Export). a variety of assets such as real estate. land. family home. SALES TAX/VAT          VAT is imposed on goods and services at stages of import stage. Truncated rate also applied in the cases specified by VAT laws which has been determined on the basis of assumed percentage of value addition. PROPERTY TAXES A property tax is somewhat similar to a wealth tax. which is often a flat rate. VAT is imposed on services provided in Bangladesh and also on the services rendered from the outside Bangladesh. A registered person is entitled to claim back the VAT paid on purchase of inputs subject to compliance with the provisions of VAT laws. 15% VAT is applicable for all business or industrial units with an annual turnover of Tk. Chartered Accountants 8. 1st and 2nd Schedule of the VAT Act. but is not limited to. OTHER FORMS OF TAXATION 8. Only a certain portion of an individual’s tangible wealth is taxed at a certain rate. All matters relating to stamps are regulated through The Stamp Act. Stamp duties are applicable on the following:      Agreements & contracts Notes Certified copies Documents Land registration. except in the cases specified. etc. 60 million. Section 14 (goods/service declared by the government). and trading. 8. 1991. The tax base may include. 8. and private firms and forests lands. supply. but may vary under different circumstances or jurisdictions. Doing Business in Bangladesh 2012 P a g e | 27 .2. STAMP DUTY Stamp duty is one of the main source of Government revenue collection. A uniform VAT rate of 15% is applicable for both goods and services. 60 million and above. Supplementary Duty (SD) is applicable as per 3rd Schedule of the VAT Act. Turnover tax at the rate of 3% is leviable where annual turnover is less than Tk. 1931.1. 1991. investment property.

if not charged to income-tax for any earlier income year. (b) any annuity. shall be included in his income. "salary" includes: (a) any wages.4. Chartered Accountants 8. P a g e | 28 Doing Business in Bangladesh 2012 . However. For the purpose of computing the income chargeable under the head "salary". PAYROLL TAX In general. the value if perquisites. the amount. 24. and (c) any arrears of salary paid or allowed to him in the income year by or on behalf of an employer. According to Section 21(1) of the Income Tax Ordinance (ITO). The significant components of salary which are excluded therefrom for the purpose of tax are as follows:  Where the house rent allowance is receivable by the employee in cash.000/= shall be included in his income. according to section 2 (58). salary or wages. (e) any leave encashment. perquisites or profits in lieu of. whichever is less.  Where no conveyance is provided by the employer and the conveyance allowance is receivable by the employee on cash. or in addition to.Howladar Yunus & Co. the amount. if any by which the house rent allowance so receivable exceeds fifty percent of the basic salary or taka 15. (b) any salary paid or allowed to him in the income year. there shall be included in the employee's income. an amount equal to seven and half percent of the employee's basic salary. (d) any advance of salary. whichever is applicable. (c) any fees.000 per month.  Where the conveyance is provided by the employer for the use of the employee partly or exclusively for personal or private purposes. by or on behalf of an employer though not due or before it became due to him.  Where the employee is provided with rent free accommodation. allowances and benefits includable in the said income shall be determined in accordance with the provision of the rule 33A to rule 33J. if any. by which the sum receivable by him exceeds the actual expenditure incurred by him shall be included in his income.  Where any amount is payable to the employee by way of hospitalisation or medical expenses. the following income of an assessee shall be classified and computed under the head "Salaries". whichever is less. namely:(a) any salary due from an employer to the assessee in the income year. the rental value of the accommodation or twenty five percent of the basic salary of the employee. commissions. whether paid or not. salary means monthly amount paid to a person for doing an ongoing long term job and typically in a permanent capacity. pension or gratuity. the allowance so receivable in excess of Tk. shall be included in his income. allowances.

The import regime consists of:    A banned list A restricted list Freely importable items (imports falling outside the above lists could be imported either freely or by fulfilling specified conditions) All other permitted imports require a LCA form to be completed:        These allow registered commercial importers to import under letter of credit without the need of an import license. All imports must be supported by a letter of credit. except for the import of capital machinery and raw materials for industrial use.Howladar Yunus & Co. Chartered Accountants 8. Bank in accordance with Foreign Exchange Control policy: Allocation is administered through authorised financial institutions. Penalties for the smuggling of illegal narcotics are severe. Some engineering products must comply with established technical standards and require an inspection certificate issued by a recognized organization. The import of a number of products is the sole reserve of nominated government trading organizations. Import transactions are governed by regulations specified on the Bangladesh Import Policy Order (IPO) issued by the Chief Controller of Imports and Exports. the taxable benefits are subject to Individual Income Tax in Bangladesh.6. FRINGE BENEFIT TAX When an employee receives benefits from an employer. Foreign exchange is controlled by the Bangladeshi.5. Ministry of Commerce. 8. TARIFFS A tariff may be either tax on imports or exportsor a list or schedule of prices. There is a short list of prohibited goods – most second-hand goods are included. Importers must lodge a 10 per cent -100 per cent (depending on the business relationship with banker) cash margin against covering letters of credit. Doing Business in Bangladesh 2012 P a g e | 29 .

leather and leather goods." Contracts are made in the form of a letter of offer. Wages vary from sector to sector as well as well through profession. The wage in Bangladesh is controlled by the relevant statutes. LABOR RELATIONS AND SOCIAL SECURITY The Employment Conditions are regulated by the Labour Act. jute and jute goods. But over the period of 1981 to 1996. No child can be employed or allowed to work in any trade or in any establishment. Millions of male and female workers are involved with these industries by occupation. In government organizations and in some private organizations as well. The minimum wage in ensured by the constitution. 9. The productivity of the employees is satisfactory and apt to change is frequent. Occupational health and safety is an important worker’s right. The act is primarily to regulate working conditions and to ensure safety in the factory. A child means a person who is yet to complete fourteen years of age.1 LABOR MARKET The wage in Bangladesh is probably the lowest in south Asia. 2006). fish and frozen food.0 million recording an annual average growth rate of 8%.7%) until the end of the 1970s. Doing Business in Bangladesh 2012 P a g e | 30 . Chartered Accountants 9. Agriculture is still the major sector providing employment followed by the service sector. The garments manufacturing. The increase is mostly attributed to adoption of definitional change in female economic activities in 1989 in Labor Force Survey (LFS). Any manufacturing company employing ten or more workers is required to be registered under the Labour Act. Child labour is prohibited under Section 34 of the said Act. tea. The legal framework of Bangladesh provides some basic protection to workers in industrial sectors in this issue. Workers may also be engaged on verbal agreements. dominant rural share and smaller share of women employment. total labor force increased from 25. Bangladesh experienced a modern annual growth rate in labor force (2.Howladar Yunus & Co. The minimum age and conditions are described in Sections 34 to 44 of the Labour Act. the dignity of labor is ensured in accordance with the principles enunciated in the ILO convention and recommendations. A basic characteristic of the Labor market of Bangladesh is a high rate of labor force growth and low rates of employment. 2006 with the office of the Chief Inspector of Factories and Establishment. In the private sector. 2006.9 million to 56. The labor market shows the existence of high underemployment. a probation period exists for skilled or semi-skilled workers varying between three moth's to one year and during this period either party may serve one month's notice for termination from or giving up to the job. NetWare are the important industrial sectors which earn substantial amount of foreign currency each year from export.

welfare and environment of employment of workers and apprentice and related issues. payment of wages. The Act also requires certain industrial undertakings to establish a Workers’ Participation Fund and a Worker’s Welfare Fund. The Labour Act. 2006 consolidated and amended previous laws relating to employment of workers.Howladar Yunus & Co.3 THE RIGHT TO WORK . a minimum-wage system has basically been established in the whole country. Chartered Accountants 9. raising and resolving industrial dispute. maternity benefit and provident funds for workers of non-Government establishments. regarding this as an important aspect of its efforts to safeguard human rights. 9. working permit from the relevant authority. relationship between workers and employers. In order to implement the labour regulations in Bangladesh. safety. 9. Bangladesh is a member to ILO and both the private and public sectors are encouraged to observe the principles so enunciated in the ILO Convention and Recommendations. colleges.NON NATIONALS Expatriates working in Bangladesh should have a current work Visa. technologists and other middle and low level skilled workers who have received technical training from universities. 9. determination of minimum wages. easily trainable and low-cost work force suitable for any labour. Furthermore. formation of trade unions. compensation for injuries arising out of and in the course of employment.intensive industry. there is an increasing supply of professionals. 2006 contains provisions on compensation for workers injured in the course of employment. health.2 THE RIGHT TO WORK – NATIONALS Bangladesh has always attached importance to the protection of the right of citizens to work and the rights and interests of workers.5 THE SOCIAL PARTNERSHIP – WORKER PARTICIPATION The Labour Act. technical training centers and polytechnic institutions.4 LABOUR LAWS / REGULATIONS Bangladesh offers an abundant supply of disciplined. Doing Business in Bangladesh 2012 P a g e | 31 .

GRANTS AVAILABLE Cash Incentives are available in the following sectors.Howladar Yunus & Co. Chartered Accountants 10.2. with different cash incentive rates:                Textile Agro products By cycle Crashed Bone Poultry Light Engineering Products Liquid Glucose used in agro product 100% Halal Meat Frozen Shrimp & other Fish Leather Ship Export Finished Leather Crushed Leather Plastic Pet Bottle Jute products Doing Business in Bangladesh 2012 P a g e | 32 . 10. SOURCES OF ASSISTANCE The government provides cash assistance / incentive for doing business in Bangladesh in some particular export oriented industries. GRANTS AND INCENTIVES 10.1.

For those visiting Bangladesh. Hotels Dhaka offers several 5 star hotels.2. restaurants. Baridhara. with acceptable expatriate housing readily available in centrally located apartments. They include the following:  Pan Pacific Sonargaon Hotel  Radisson Water Garden Hotel  The Westin Hotel  Seagull Hotel  Ruposhi Bangla Hotel  Regency Hotel and Resort  Hotel Sarina 11.500 (luxury units). safe and comfortable place to live in.1. and Banani.500 (luxury units).000/month. In addition there are a number of medium standard hotels and guest houses in Dhaka and Chittagong to accommodate the expatriates. Dhaka offers several international standard hotels including the Dhaka Sheraton and the Sonargaon (a Pan-Pacific Hotel). with a good range of expatriate housing readily available in centrally located apartments.000-$1.Vocational Education System Doing Business in Bangladesh 2012 P a g e | 33 . Rental Accommodation Expatriates in Bangladesh have found it to be an affordable. Luxury houses rent from $1. These hotels provide deluxe accommodation. health clubs and entertainment facilities. quiet and secluded housing are also available for rent. Chartered Accountants 11. houses for $1. Most expatriates live in these areas.Howladar Yunus & Co. safe and comfortable place. QUALITY OF LIFE 11. A quality apartment rents for $700-$1. HOUSING Expatriates living in Dhaka have found it to be an affordable.200/month. Many expatriates live in the Dhaka areas of Gulshan. In several suburban areas. A typical apartment will rent for $800-$1.200-$1. Baridhara and Banani. Popular places to live in include Gulshan. EDUCATION The three main educational systems in Bangladesh: * General Education System * Madrasah Education System * Technical .

S. Doing Business in Bangladesh 2012 P a g e | 34 . Higher Education: Under-graduate education of various duration (2 to 5 years) are offered to 18+ students at a number of public and private universities / degree colleges/technical colleges/ specialized institutions. Higher Secondary Stage: After 10 years of schooling (primary and secondary). humanities. In metropolitan cities. conducted by the Madrasha Education Board and London/Cambridge University respectively. At the end of this phase.Howladar Yunus & Co. etc. The students of religious education and English medium streams also sit for their respective public examinations. Successful completion of a degree course is a pre-requisite for appointment to a white-collar civilian job. some students switch over to join the vocational stream. offered at Vocational Training Institutes (VTI) and Technical Training Centres (TTC) run by the Ministry of Education.) examination conducted by the education boards. Secondary Stage: On completion of primary education. Students of Religious and English Medium streams also sit for their respective public examinations. one has to sit for another public examination called Higher Secondary Certificate (H. There. students (16+) who succeed in passing the Secondary School Certificate (S. At the end of 10th class. students (11+) enroll for junior secondary education that spans over 3 years. After 2-year higher secondary education. government and non-government primary schools cater to the educational needs mainly of the poorer sections of the people. science. commerce. and the Ministry of Labor and Employment respectively.) examination under the supervision of seven education boards. conducted by the Madrasha Education Board and London/Cambridge University respectively. while students in the mainstream continue in government and non-government secondary schools for a 2 year secondary education in their respective areas of specialization i. Chartered Accountants Primary Stage: Five-year compulsory primary education for the 6-10 age group is imparted mainly in government and non-government primary schools. the students sit for their first public examination called Secondary School Certificate (S. or enroll in technical/ poly technical institutes for technical education. however.C.S. however. Dakhil and O’ level.C.S. as the better-off families usually send their children to Private English Medium schools/ secondary schools that run primary sections as well.e. Alim and A' level.C. exist some NGO-run non-formal schools catering mainly for the dropouts of the government and non-government primary schools.)/Dakhil/O’ Level examination have the option of joining a college for a 2 year higher secondary education in their respective areas of specialization.

122 culverts. Doing Business in Bangladesh 2012 P a g e | 35 . As of January 2010. Cox's Bazar. are widely used in carrying both passengers and cargo.Howladar Yunus & Co. Ishurdi. RHD are currently operating about 161 ferry boats in 81 crossings (13 on national highways. Apart from quick movement of goods and passenger traffic. 11. 11 on regional highways and 57 on feeder roads) on its road network throughout the country. Of these.498 bridges/culverts. railway and water. There are now 13 operational airports and Short Take-off and Landing (STOL) ports in Bangladesh. RHD also control a total number of 4. Jessore. among the various modes of transport. Road In Bangladesh. road transport system has been playing a significant role in transporting passengers and goods. road. The 4. The airline network is also extensive and effective. RHD has total length of 20. Rajshahi. COMMUNICATION AND TRANSPORT The transport sector of Bangladesh consists of a variety of modes.The Roads and Highways Department (RHD) manage several categories of road. which was opened to traffic in 1998. Local Government Engineering Department (LGED) has so far constructed a total of 133. is the eleventh longest in the world. the airports at Dhaka.514 km (64. maintain and supervise airports and regulate air traffic. Air The Civil Aviation Authority is a public sector entity entrusted to construct.3.659 bridges and 6. it is facilitating transmission of electricity and natural gas and has integrated the telecommunication links.691 km dirt road and 68. Comilla. Air cargo and STOL services have been handed over to the private sector by the government. These are Dhaka.e. Syedpur. Sylhet and Thakurgaon. Barisal. It has established a strategic link between the East and the West of Bangladesh. The national flag carrier Biman flies to 26 international and eight domestic destinations.8 km long Bangabandhu Bridge. i.948 Km road unders its control.823 km paved roads) upazila and union roads and 971. As the country is essentially a flat plain all three modes of surface transport. Chartered Accountants Post-graduate education normally of 1-2 year duration is provided at the universities and selected degree colleges and institutions. Chittagong. It is generating multifaceted benefits to the people and promoting inter-regional trade. Chittagong and Sylhet serve international routes.

These carry passengers and merchandise on a large scale. Chittagong. Bangladesh Inland Water Transport Authority (BIWTA) has been established by the Government for maintenance of navigability of ports and channels while the state-owned BIWTC provides passenger and cargo services in inland waterways and coastal areas of the country. Bangladesh Railway had a total network of 2.83 km and Meter Gauge1. There are two major ports in the country.88 km) and a total of 440 stations at the end of the year 2008-2009.04 km (Broad Gauge 659. After inclusion of railway track over the Jamuna Bridge. Chartered Accountants Rail About 32% of the total area of Bangladesh is effectively covered by railways.000 years. The alluvial flood plain formed by these rivers covers most of the country. Train services between Dhaka-Kolkata have been commenced on 14 April 2008 in order to establish communication between Bangladesh and India.800. The entire coast along the Bay of Bengal is 710 km long. the oldest port. has been an entry-port for at least 1. Waterways Country made crafts are the most widely used carriers on the rivers. railway link between east and west zone has been established. The Mongla port in Khulna region serves the western part of Bangladesh.33 km. The landscape of Bangladesh is dominated by about 250 major rivers which flow essentially north-south. Dual Gauge 374. a launch or steamer will play for trade.835.Howladar Yunus & Co. Wherever there is a river and a village. Doing Business in Bangladesh 2012 P a g e | 36 .

400. 180. 2 crore Doing Business in Bangladesh 2012 P a g e | 37 . First Tk. 300.000 25% 10% of Applicable Tax If Total Net Worth exceeds Tk.000 Next Tk. RATES OF TAX – INDIVIDUAL/SOLE PROPRIETORSHIP/FIRM Rates of Income Tax for the Assessment Year 2011-2012 Total Income First Tk.000 Next Tk.000 Balance Income Minimum Tax Liability Non-resident Individuals Surcharge Rate Nil For Individuals/Sole Proprietorship/Partnership 10% 15% 20% 25% Tk. First Tk.000–For Female.Howladar Yunus & Co.000–For Individuals aged 65+ years. 250. Next Tk.000–For Male. 300. Chartered Accountants APPENDICES A. 200. 200. 2. First Tk.000–For Disabled Individuals.

Tax Rate Insurance & Financial Institutions) 27. out of which maximum 5% could be Pre IPO Placement) Private Limited Companies including Non. Tax Rate 37.50% publicly traded companies (except Bank.Howladar Yunus & Co.50% If Dividend > 20%. Tax Rate 37. Insurance & Financial Institutions) Publicly Traded Companies (except Bank.50% 20% Bank. Tax Rebate 10% If Dividend < 10%.5% If declared Dividend not paid within the time specified by SEC.5% 42. RATES OF TAX – COMPANIES Rates of Income Tax for the Assessment Year 2011-2012 Type of Companies Rate Mobile Phone Operators 45% (35% if it is listed by issuing minimum 10% shares through IPO. Chartered Accountants B.37. Insurance & Financial Institutions Cigarette Manufacturing Company Dividend Income Doing Business in Bangladesh 2012 P a g e | 38 . If Dividend <20% but >10%.50% 42.

For affixing on the Memorandum of Association: BDT 500.000.00 up to 3. For affixing on the Memorandum of Association: BDT 500. @ BDT 200.00 or part after first 50.00 > 10.000.000.00.00 ii.00 45. For NC clearance: @ BDT 600. Registration.00 up to 3.00 or part after first 50.00 10.00.000.00 or part after first 20.00.00 PUBLIC COMPANY (Companies Act. fees and stamps are to be provided as under: Fees of Name Clearance i. Chartered Accountants C.00 up to 24.00 Additional for every 10.00 Additional for every 10. for affixing on the Articles of Association: For Authorized Capital Up to 10.000.00 for each time extension application.00.00 > 10.00 Registration fee i.00.00.00 ii. 1994) Stamps i. For filing 6 documents (5 filled in forms plus 1 memorandum & articles of association.000. For time extension: @ BDT 100.000.000. Registrar of Joint Stock of Companies and Firms (RJSC) FEES To apply for Name Clearance.00 for each of the proposed names.00 Stamp (BDT) 2.000.200.000.00 360.000.00 per document): BDT 1.00. Certified Copies and to submit returns.00.00 up to 180.00.000.000.000.00.00 10.000.000. Stamps and Fees of Registration PRIVATE COMPANY (Companies Act.000.000.00.000.00 up to 45. 1994) Stamps i.00 Stamp (BDT) 2. For the authorized share capital: Authorized Capital (BDT) Fee (BDT) Up to 20.00 50. ii. For affixing on the Articles of Association: For Authorized Capital (BDT) Up to 10.00 Additional for every 10.00.00.00 4.000.00.00.00 > 3.00 Doing Business in Bangladesh 2012 P a g e | 39 .000.000.00 50.000.000.000.00 Additional for every 1.00 4.00 10.00.00 > 3.00.00 or part after first 10.Howladar Yunus & Co.000.00 ii.

Howladar Yunus & Co. For affixing on the Articles of Association: BDT 1.00 Additional for every 10.00 ii.00. @ BDT 200.00 or 1.600. For filing 8 or 9 documents (7 or 8 filled in forms plus 1 memorandum & articles of association.00 or part after first 10.00 ii.00 or part after first 20.00 FOREIGN COMPANY (Companies Act.00. For the authorized share capital: Authorized Capital (BDT) Fee (BDT) Up to 20. 250.00 50. 1860 i.00 Additional for every 1. 1932) i.00 Doing Business in Bangladesh 2012 P a g e | 40 . 1994) Stamps i. 0.00 up to 24. For filing 6 document (1 memorandum and articles of association @ BDT 200.00 or part after first 50.800.00 up to 180.200.000.00 For >20 up to 100: BDT 1.00. Registration fee: BDT.00 TRADE ORGANIZATION (Companies Act.000.00 PARTNERSHIP FIRM (Partnership Act.00.500.00 and 5 other documents @ BDT 200. Registration Filing Fee: BDT.00 10.00 Additional for every 10. For the number of members of association: For up to 20: BDT 600.00 ii.000. for filing 6 documents (5 filled in forms @ BDT 200. 110.000.000.200.000.000.00 360. @ BDT 200.000. Chartered Accountants Registration fee i.00 Registration fee i.00 For unlimited members BDT 4.00 Additional for every 10.000.00 or part after first 50.00. Registration Fee: BDT. 1994) i.000.00 50.00 up to 45.500.00 per document): BDT 1.000.000.00 45.00 per document): BDT 1.00 SOCIETY (Societies Registration Act.00 For every 100 or part above the first 100 (limited member) BDT 150.00 per document plus 1 memorandum & articles of association.500.00): BDT 1.

00 60.000. Returns Filing i. b.00 per document b.00.00 or part after the first 5. Late fee for filing any document beyond the schedule time: @ BDT 2.000.000.00 50.00 50.000. For filing any document: @ BDT 200.00.000.00 Additional for every 5.000.00.00.00 upto 120.00. Registration of Mortgage.000.00 FOREIGN COMPANY a. Returns Filing i. For filing any document within the schedule time: @ BDT 200.00 or part after the first 50.00 150.000.000. Registration of Mortgage. Returns Filing i.00.00 or part after the first 50.000.00 upto 120.00 200.000.00 per day not exceeding BDT 1.000. Late fee for filing any document beyond the schedule time: @ BDT 2.00 150.00 per document.00 per document. Chartered Accountants Fees of Returns Filing COMPANIES (Private & Public) a.00 SOCIETIES i.00 TRADE ORGANIZATION a.00.00 Additional for every 5.000. Registration of Mortgage.00 per document Doing Business in Bangladesh 2012 P a g e | 41 .00.00 per document ii.00.00.00. b.000. Debentures and Charges Secured Amount (BDT) Fee (BDT) upto 5.00 Additional for every 5.00. For filing any document within the schedule time: @ BDT 200.00.00.000.000.00 per document ii.Howladar Yunus & Co. Debentures and Charges Secured Amount (BDT) Fee (BDT) upto 5.00 or part after the first 50.00 or part after the first 5.00 or part after the first 5.00.00.000.000.000.00 per day not exceeding BDT 1.00 50.00 per document ii.00.00 60.00 upto 120. Late fee for filing any document beyond the schedule time: @ BDT 2. For filing any document within the schedule time: @ BDT 200.00 per day not exceeding BDT 1.00 Additional for every 5.000.00 60.00.00 Additional for every 5. Debentures and Charges Secured Amount (BDT) Fee (BDT) upto 5.00 Additional for every 5.000.

Non-judicial stamp i. For copy: BDT 0.Howladar Yunus & Co. Stamps and Fees of Issuance of Certified Copies Private Company. For Articles of Association or part thereof: BDT 20.00 v.00 For copy of Alteration of Name: BDT 20. Public Company.00 iii.50 ii.00 c. 5 or 6: BDT 4.00 subject to a minimum of BDT 100. For copy of certificate of incorporation: BDT 100. Court fee (stamp) . For Memorandum of Association or part thereof: BDT 20. Chartered Accountants PARTNERSHIP FIRM i.00 ii.00 iv.00 iii. Copying of documents for each 100 words or part: @ BDT 5.00 each.00 ii. For inspection of records: BDT 100.00 subject to a minimum of BDT 100. For Inspection of documents: BDT 1.00 b. Trade Organization and Foreign Company a. Fees i.50 for each 100 words or part thereof Fees of Winding Up i. Identified by the effective date For copy of Address : BDT 20.00 ii. Comparison of document each 100 words or part: @ BDT 5. For each of other document : BDT 20.00 b. For copy of certificate of commencement of business: BDT 100.00 Doing Business in Bangladesh 2012 P a g e | 42 . For Private and Public Company: BDT 20.00 For copy: BDT 0. Identified by the effective date i.00 of each document Society a. For Trade Organization and Foreign Company: BDT 10. Identified by the applicable year For Inspection of documents: BDT 1.50 for each 100 words or part thereof Partnership firm a.per application per company: BDT 20. For filing Form -2.50 For copy of Annual list of Managing Body: BDT 20.

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