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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The Industries are Textiles. Muslim 89. Jute Goods (including Carpet). Bangladesh imports mostly Petroleum Product and Oil. The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central bank. Official language is Bangla (Bengali). 4. Leather Goods and Tea.Howladar Yunus & Co. THE COUNTRY 4. English is widely used in Government. exercises monopoly over the issue of currency and the banknotes. CURRENCY AND BANKING Currency of the country is Bangladeshi Taka (Tk). Rajshahi. 4. Light Engineering.4. Natural resources are Gas. like most of the central banks of different countries.246 km where Burma covered 193 km and India covered 4. 4 State Owned Commercial Banks (SCB). mild winter (October to March). GEOGRAPHY/STATISTICS Bangladesh is located in the Southern Asia.The climate of the country is focused as tropical. 9 foreign banks and 29 non-banking financial institutions. Garments.3 %. Christian 0. 30 domestic private banks. Ceramics and Pharmacy. Business and Universities. humid.1. Buddhist 0. The financial system also embraces insurance companies. a “Lender of the Last Resort”. hot. Cement.3% and Other 0. warm rainy monsoon (June to October). Sugar. per capita $664. Rangpur and Sylhet. Khulna.39% and permanent crops covered 3. Dhaka.3%. Paper Newsprint. 5 government owned specialized banks. Chittagong. Bangladesh Bank. 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.): $100 billion. Bangladesh exports mainly Ready Made Garments including Knit Wear (75% of exports revenue). stock exchanges and co-operative banks. 4. Arable land covered 55. Jute. The Total area is 147.6 %. Raw Cotton. Chemical Fertilizer. humid summer (March to June).3. Iron.425. Bangladesh Bank is both the Government’s banker and the banker’s bank.491. Timber and Coal. Real growth rate: 6%. Out of total population. GOVERNMENT/POLITICS The conventional long form is “People's Republic of Bangladesh” and the conventional short form is “Bangladesh”. bordering the Bay of Bengal with the coastline covering 580 km between Burma & India with the land boundaries 4. Chartered Accountants 4. Tea Processing. The time difference is GMT+6.053 km. ECONOMY The economic position of the country is GDP/PPP (2011 est. Doing Business in Bangladesh 2012 Page|4 . Steel and Wheat. The government type is parliamentary democracy. Others include: Shrimps.2. Soybean and Palm Oil. Machinery and Parts.08% of total land area. Capital is Dhaka and the administrative 7 divisions are Barisal.3%.5%. Inflation: 11.570sq km and the total population is 164. Hindu 9.

The basic law of Bangladesh is the constitution of the People's Republic of Bangladesh. law of crimes. Amended in 1977 to remove principle of secularism included in Part II entitled Fundamental Principles of State Policy. The Supreme Court of Bangladesh is the apex court with its two divisions. but can make by-laws to the extent authorized by the legislature. The laws enacted by the legislature and now in operation regulate almost all spheres of life. Claims regarding money. Constitution adopted 4 November 1972. fifteen amendments to the constitution have been made. To seek remedy a person has to file a case before the appropriate court or authority. property. 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. fiscal laws. Till 2010. Subordinate Courts and Tribunals. The Courts can be classified into two classes viz. Such subordinate legislation is known as rules or regulations. Chartered Accountants 4. All laws.Howladar Yunus & Co. personal laws. In addition. there are various other laws on different subjects regulating different fields and spheres of activities of national life. After the emergence of Bangladesh in 1971. labour and industrial laws. a rigid constitution has been adopted which came into force on 16 December 1972. 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. 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. the High Court Division and the Appellate Division. The police investigates the cases lodged with the police station and produces witnesses before the court during trial. As the apex court the high court division has been vested with the power to hear appeals and revisions from subordinate courts. the Supreme Court and. 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. but legal developments since 1972 have been distinct. 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. rules or regulations made by the competent authority are applied in the Courts and Tribunals. election laws. There are other authorities before which remedies may Doing Business in Bangladesh 2012 Page|5 . 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. commercial laws. LEGAL SYSTEM Bangladesh seceded from Pakistan in December 1971. service laws. Ordinarily executive authorities and statutory corporations cannot make any law. press laws and laws relating to the remedies. On the other hand. 1972 as amended from time to time.5. such rules or regulations are also enforceable by the court like the laws made by the legislature. Unless found ultra vires of the parent law. 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.

and insolvency courts have been set up presided over by district or additional district Judges to declare defaulting borrowers as insolvent. income tax appellate tribunal to decide income tax disputes. To try offences committed by children below the age of 16 years. 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. Except in respect of enforcement of fundamental rights. 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. there are labour courts and labour appellate tribunals to decide labour disputes. company matters and writ petitions. Those authorities are administrative authorities or tribunals. For example. To decide election disputes the election tribunals are constituted with judicial officers. Chartered Accountants be sought by an aggrieved party. 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. excise and VAT Appellate tribunal to decide disputes regarding custom and excise duties and VAT. special judges to try corruption cases against public servants. and juvenile courts follow the special procedure laid down in the children's Act. Family courts have been constituted with assistant judges to decide family disputes. admiralty.Howladar Yunus & Co. court of settlement to decide disputes about abandoned properties. Doing Business in Bangladesh 2012 Page|6 . juvenile courts have been formed with the magistrates and sessions judges. administrative tribunals and administrative appellate tribunal to decide service disputes of public servants.

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

A partnership deed includes the name of the firm. rights and duties of individual partners. 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. or take other legal proceedings. In Bangladesh. The Partnership Act 1932 does not require a partnership deed or agreement to be registered. term of partnership. the capital and property of the firm. termination of agreement by insolvency.Howladar Yunus & Co. etc. rate of interest (if any) on partners' capital.  Trade License from City Corporation/Municipality/Union Council (Local Government Bodies). A non-profit making association is not a partnership in law of Bangladesh. to enforce a right from a contract. institutions or associations cannot be a member of a partnership. death. By definition. The registration of such firm is optional.2. nature of business.. and drawings on account of profit. A partnership can arise only as a result of an agreement or contract.  Minutes of Partners’ Meeting. a partnership firm can enjoy some legal rights and facilities. and an arbitration clause. 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). provision for salaries. Also. between the partners. the capital of individual partners. 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. Principle Legislation  The Partnership Act. a partnership firm is to be formed under the provisions of the Partnership Act 1932. advances and drawings.  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 . division of profits and losses (capital and revenue). 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. valuation of goodwill and share of assets on sale or death. 1932. Chartered Accountants 5. or to claim a set-off in any suit filed against it. If a partnership business is not registered. However. But if registered. powers of admission and expulsion of a partner. provision for accounts and audit. an unregistered firm can not file a suit. General Requirements to Start a Partnership Business:  The Partnership Deed. with the intention of making and sharing profits among themselves. In general. expressed or implied.

no outward remittance of any kind from Bangladesh sources by the said offices is allowed except the cases permitted by the foreign exchange regulations. Thus. The said offices shall strictly follow the foreign exchange regulations of the government of Bangladesh. widening the scope of its trading and manufacturing activities as well as bringing more opportunities and opening unexplored avenues for it. Generally. A branch office refers to an establishment which carries on substantially the same business and activity as is carried out by its Head Office. 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. 1989. government of Bangladesh. 1994. one may establish its business only under limited company. The activities of Branch/Liaison/Representative office of a foreign entity shall remain confined to those as set forth in the permission of BOI. partnership and limited company. Rues & Regulations of Board of Investment (BOI). Security clearance is required to be obtained from Ministry of Home. Chartered Accountants  Membership of Trade Body As per publication of Board of Investment (BOI).Howladar Yunus & Co. 5.000 within 2 (tow) months from the date of the issue permission letter as establishment cost and 6 months operational expenses. Branch offices help in expanding the size of the market for a company's product by attracting more customers.3. Limited Partnership Firm in Bangladesh is not realistically available. these offices help to fuel the growth of the company and enhance its profitability on a sustained basis. Such offices shall have to bring inward remittance at least USD 50. In the case of a foreign investor. The Foreign Exchange Regulation Act.4. 5. 1947 Doing Business in Bangladesh 2012 Page|9 . 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. local investor you may setup a business under several organizational structures such as single proprietorship. LIMITED PARTNERSHIP FIRM In Bangladesh. Principal Legislation     The Investment Board Act. The Companies Act.

1947. 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. 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. Proposed organogram of the office. List of activities of the proposed office All papers/documents must be attested by the Bangladesh Embassy/High Commission of the country of origin. duly filled in. within one month of the establishment of the place of business. permission is sought from Bangladesh Bank for opening branch/liaison Office in Bangladesh by foreign entities including airlines. 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. 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. NOC from Bangladesh Bank etc. firms under Section 18B of the Foreign Exchange Regulation Act. Embassy/High Commission of the applicant's country of origin or Apex Chamber of Commerce of the country of origin. Registrar of Joint Stock Companies (RJSC) Foreign Combines which establishes a place of business in Bangladesh shall. and required formalities with RJSC shall have to be performed. signed and stamped.Howladar Yunus & Co. Doing Business in Bangladesh 2012 P a g e | 10 . (b) the full address of the registered or principal office of the company. Audited Accounts of the last financial year. Certificate of Incorporation. Bangladesh Bank (BB) Afterwards. Board Resolution to open a Branch/Liaison/Representative Office in Bangladesh. companies. a certified Penally or English translation thereof. Name and Nationalities of the Directors/Promoters of the Principal Company. 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. An investor can close a Branch Office/Liaison Office/ Representative Office in Bangladesh by an application with audit report. and if the instrument is not written in Beguile or English Language. updated tax payment certificate. Memorandum of Association (MOA) and Articles of Association (AOA) of the Principal Company.

5. ii. Company Limited by Guarantees.    Limits the number of its members to minimum 2 and maximum 50 excluding the persons employed in the company. Business in Bangladesh may be carried on by a company formed and incorporated locally or by a company incorporated abroad but registered in Bangladesh. Limited companies may be limited by shares or by guarantee.5. 1969 and the Securities and Exchange Commission Act. Public Limited Company and Private Limited Company b. if any.Howladar Yunus & Co. c. (d) the name and address or the names and addresses of one or more persons resident in Bangladesh. a limited company limited by shares. may be further divided into public companies and private companies. 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. And the former of these. Chartered Accountants (c) a list of the directors and secretary. Companies could be classified in following categories: a. The incorporation or registration is done by the Registrar of Joint Stock Companies and Firms under the provisions of the Company's Act 1994. (e) the full address of the office of the company in Bangladesh which to be deemed its principal place of business in Bangladesh. 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. Doing Business in Bangladesh 2012 P a g e | 11 . 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. 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. Company Limited by Shares i. 1993 as amended from time to time. the Securities and Exchange Ordinance. Unlimited Company Private Limited Company:  Restricts the rights to transfer the shares. of the company.

1947. Principal Legislation  The Companies Act. These articles are subordinate to and controlled by MOA. signed and submitted to the Registrar of the Joint Stock Companies and Firms.  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. whether it is public or private limited and the location of the registered office at the company. Chief Inspector of Factories and Establishment Any manufacturing company employing 10 (ten) or more workers is required to be registered under the Labour Act.  Registration Application: Prescribed Application Form for registration has to be filled in. 994. 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. the divisions of this capital into shares of fixed amount and liability of its members. Doing Business in Bangladesh 2012 P a g e | 12 . Has at least 3 Directors. Chartered Accountants    Has minimum 7 members but there is no maximum limit. The MOA should clearly spell out the main objectives. the authorized capital. The Foreign Exchange Regulation Act.  Memorandum of Association (MOA): MOA states the name of the company. The act is primarily to regulate working conditions and to ensure safety in the factory.   The Securities and Exchange Ordinance. Unlimited Company: An unlimited company refers to a company having no limit on the liability of its members. 1969. May a private company converted into a public company. An application in plain paper along with nominal required fees is be submitted to the RJSRF for verification and clearance of the proposed name. 2006 with the office of the Chief Inspector of Factories and Establishment. 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.Howladar Yunus & Co.

or of another and the owner The person who reposes or declares the confidence is called the “Author of the Trust”. by any law for the time being in force. “Registered” means registered under the law for the registration of documents for the time being in force. Doing Business in Bangladesh 2012 P a g e | 13 . etc. The “Beneficial interest” or “Interest” of the beneficiary is his right against the trustee as owner of the trust-property. The salient features of Trust are as follows:     In every trust deed. 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. unless there be something repugnant in the subject or context.6. as such. The trust deed should be executed on non-judicial stamp paper. and arising out of a confidence reposed in and accepted by the owner. The trust deed should clearly spell out the aims and objects of the trust. The main instrument of any public charitable trust is the trust deed. 1882. the value of which would depend on the valuation of the trust property. A breach of any duty imposed on a trustee. and the instrument. The person who accepts the confidence is called the “Trustee”. how the trust should be managed. is called a “Breach of trust” And in the Trust Act. or declared and accepted by him. by which the trust is declared is called the “instrument of trust”. if any. The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses. The subject-matter of the trust is called “Trustproperty” or “Trust-money”. for the benefit of another. The person for whose benefit the confidence is accepted is called the “Beneficiary”. the minimum and maximum number of trustees has to be specified.Howladar Yunus & Co. TRUSTS Description A “Trust” is an obligation annexed to the ownership of property. wherein the aims and objects and mode of management (of the trust) should be enshrined. how other trustees may be appointed or removed.

 Two other documents which should be submitted at the time of making an application for registration are affidavit and consent letter. 1989.. 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 . There are other types of companies such as JV limited by guarantee.Howladar Yunus & Co. mode of succession. The application form should be submitted. 1882. the applicant has to affix a court fee stamp of specified amount. After providing details (in the form) regarding designation by which the public trust shall be known. together with a copy of the trust deed.  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. Principal Legislation    The Companies Act. Chartered Accountants Principal Legislation     The Trust Act. 1860. The Registration Act. The Societies Registration Act. 1994. a new entity and new assets by contributing equity. depending on the value of the trust property.7. 5. 1908. names of trustees. expenses and assets. 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. JOINT VENTURES Description Joint venture (JV) is a business agreement in which parties agrees to develop. The Companies Act. joint ventures limited by guarantee with partners holding shares. The Investment Board Act. They exercise control over the enterprise and consequently share revenues. The Foreign Investment Promotion and Protection Act. 1994. for a finite time. etc.

A foreign company can own land in its name. 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. c) Govt. 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. PAYE Scheme. The dividend earned each year can be remitted based on the necessary documentation and approval. 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. He can mention for certain land in a district (regional centre) and can sought support of BOI. Issue of work permit. The royalty and technical assistance can also be remitted based on the documents and criteria fixed by the government. b) Private lands: The private lands can be scouted by the investors itself. Recommendation for import of machinery and raw materials.Howladar Yunus & Co. dividend and royalty technical assistance  The equity can be remitted while the company decided to exit the country. BOI can request the Doing Business in Bangladesh 2012 P a g e | 15 . Suppliers' Credit. 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. deferred payment. owned land (khas land). etc. The equity that is brought in is allowed to repatriate from the country with the dividend earned. owned land: The investor can seek for Govt. Remittance of the equity. Remittance of Royalty.

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

A cooperative can also be defined as "an autonomous association of persons united voluntarily to meet their common economic. the government of Bangladesh set up the Rural Development and Cooperative Division ( RDCD ) under the Ministry of Local Government. 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. Various aspects regarding cooperative enterprise are the focus of study in the field of cooperative economics. and cultural needs and aspirations through jointly owned and democratically controlled enterprise". For banking and unlimited liability cooperatives some financial conditions have been imposed. 2001. Principal Legislation   The Cooperative Societies Act. social. The Cooperative Societies Rules. planning.8. CO-OPERATIVES Description Co-operative is a business organization owned and operated by a group of individuals for their mutual benefit. Doing Business in Bangladesh 2012 P a g e | 17 . This Division is responsible for policy formulation. monitoring and administration of rural development and cooperative initiatives of the country. Chartered Accountants 5. Rural Development and Cooperatives.Howladar Yunus & Co. 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). 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. To uplift the status of the poor people living in the rural areas.

shall be deemed to be resident. a non-resident. 50/. a Non-Resident shall not be entitled to any sort of tax rebate like investment tax rebates etc. Moreover. before the expiry of such six months. although some firms may qualify for a tax holiday in the initial years after entering Bangladesh. unless extended by competent tax authority. Tax is levied on income but taxability of a person is determined on the basis of his residential status. assessment is made after hearing. Doing Business in Bangladesh 2012 P a g e | 18 . A Company is obliged to submit income tax return by fifteenth day of July next following the income year or. by the thirtieth day of September next following the income year.1. For returns submitted under Universal Self-Assessment Scheme. INCOME TAX – INDIVIDUALS/SOLE PROPRIETORSHIP/PARTNERSHIP FIRM Income tax is imposed on the basis of ability to pay. The last date for submission of income tax return. 1. INCOME TAX – COMPANIES No distinction is made for the purposes of corporate income tax between foreign owned companies and Bangladeshi-owned companies. Chartered Accountants 6.for every day of delay. where the fifteenth day of July falls before the expiry of six months from the end of the income year.is the basic principle of charging income tax. the acknowledgement slip is determined to be an assessment order.2. The more a taxpayer earns the more he should pay''. Consequences of Non-Submission of Return   Imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. Return filed under Universal Self -Assessment is of course subject to audit. Non-resident except a Bangladeshi non-resident has to pay tax at the maximum rate of 25% irrespective of total income.000/In case of a continuing default a further penalty of Tk. Otherwise. 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.Howladar Yunus & Co. DIRECT TAXATION 6. Assessment Procedures:   For a return submitted under normal scheme. 6.

merchant bank. This system is considered as an important mechanism of tax collection. portfolio management company. financial institution. TAX ON CAPITAL GAINS Capital Gain from the Transfer of Listed Shares  Capital gains arising on the sale or transfer of non-government securities. 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.  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%. In the case of a person other than a company. tax payable on the capital gains at the rate applicable to his total income including the said capital gains.Howladar Yunus & Co. leasing company. tax at the rate of fifteen per cent on the Capital Gain.capital gain shall be included in the total income and will be taxed accordingly. particularly Sections from 48 to 56.   Capital gainshall be taxed @ 10% in the case of capital gain earned by a Company. In the case of a person other than a company. including stock and shares of public companies listed on the Bangladesh stock exchanges are exempted from income tax in the case of individual.3. Tax shall be imposed on Capital gain@ 5% if the transferor is a sponsor. stock dealer or stock broker company. or tax at the rate of fifteen per cent on the amount of the capital gains whichever is the lower. shareholder or director of a bank. Capital Gain from the Transfer of Other Capital Assets    In the case of a company. Salient Features of Withholding Tax:   Chapter VII (Payment of Tax Before Assessment Section). 6. Every company is required to file a returnof withholding tax so collected or deducted in each quarter. The taxpayer receives a certificate from the withholding agent and gets credits of tax against assessed tax demand on production of the certificate. insurance company. Doing Business in Bangladesh 2012 P a g e | 19 .if the capital assets disposed after not more than five years. provides for the income from which tax shall be deducted or collected at source. WITHHOLDING TAXES In Bangladesh withholding taxes are usually termed as Tax deduction and collection at source. Chartered Accountants 6.if the capital assets disposed after five years.4.

6. the Bangladesh authorities have not imposed death duties or estate duties. Chartered Accountants  In the event of failure to deduct. Doing Business in Bangladesh 2012 P a g e | 20 .    An assessee is in default or is deemed to be in default in making payment of tax. may be exposed to a penalty of a sum not exceeding the amount in arrear. 6. GIFTS TAX In Bangladesh. 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. DEATH DUTIES Currently. 6. collect or pay.7. or failure fails to pay the tax so deducted or collected. 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. Tax rates will be applicable as local company’s tax rate. TAXATION OF FOREIGN ENTERPRISES AND OPERATIONS There are no specific tax benefits for foreign companies and operations on Bangladesh. there are no specified tax regulations on Gifts tax.5. the person shall be deemed to be an assessee in default and pay an amount at the rate of 2% per month.Howladar Yunus & Co.6.

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

Remittance by shipping lines. Remittance of royalty/technical fees: Industrial enterprises may enter into agreements for payment of royalties. 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. and dividend and sale proceeds (including capital gains) of shares of companies listed in a Stock Exchange in Bangladesh. 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 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. Doing Business in Bangladesh 2012 P a g e | 22 . funds collected in Bangladesh towards freight and passage. courier service companies: Foreign shipping lines. if any. which is accorded for amounts not exceeding the net asset values of the shares. 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. however. or (b) 6% of the cost of imported machinery in the case of new projects. airlines. 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. ADs may remit the royalties. need to be registered with the Board of Investment (BOI). remittance of dividend declared out of previous year's accumulated reserves. Chartered Accountants Remittance of profits: Branches of foreign firms/companies including foreign banks. technical know-how/technical assistance fees payable as per agreements registered with/approved by BOI. Agreements not in conformity with these general guidelines require prior permission of the BOI. Remittance of sale proceeds of shares of companies not listed in Stock Exchange requires prior Bangladesh Bank permission. after adjustment of local costs and taxes.Howladar Yunus & Co. These agreements. through an AD. without prior approval of Bangladesh Bank. airlines and courier service companies may send abroad.

participation in export fairs and seminars. 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. furnace oil. Japanese Yen. Euro. bitumen. Bonafide requirement beyond US $ 6000 is accommodated by Bangladesh Bank upon written request submitted with supporting documentation. An importer has automatic access to foreign exchange for import of all items outside the control list. foreign or joint venture) may borrow abroad with prior Board of Investment (BOI) approval. Chartered Accountants Foreign and Local Borrowings  Foreign loans: Industrial enterprises in Bangladesh (local. Convertibility on Trade Account Bangladesh Taka is fully convertible for settlements of trade related transactions.  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$.). Exporters may. Exchange Facilities for Exporters  New Exporters: Annual foreign exchange quota for business travel abroad for new exporters has been set at US $ 6000. the retention quota is 10%. For export items with high import contents (such as naptha. retain the foreign currency in interest bearing renewable term Doing Business in Bangladesh 2012 P a g e | 23 . 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. readymade garments etc. machineries and spares etc. import of raw materials. Funds from these accounts may also be used to set up offices abroad without prior permission of Bangladesh Bank. Import licence is not required for import of items not in the control list. 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. Funds from these accounts may be used to meet bonafide business expenses.Howladar Yunus & Co. 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. at their option. The computer software and data entry/processing service exporters may also retain up to 50% of realised export proceeds in foreign currency accounts.

remittance of premia on account of re-insurance.000 or Pound Sterling 1. remittance of premia on foreign currency policies taken by Bangladesh nationals while residing abroad. upto 10% of realised export proceeds. Doing Business in Bangladesh 2012 P a g e | 24 . However. articles etc. 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. 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. remittance of royalty/honoraria/fees to non-residents including foreign news agencies for features. remittance on account of short weight.Howladar Yunus & Co. remittance of purchase price of ships acquired by private firms/companies. partial shipment etc. 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.. subscribed by local newspapers/magazines. remittance of “General Average” collected from consignees in Bangladesh.500 equivalent. This quota may also be kept in interest bearing renewable term deposit accounts. Chartered Accountants deposit accounts in Bangladesh with a minimum amount of USD 2. advertising of Bangladeshi commodities in mass media abroad. Funds may be drawn from these accounts to meet expenses for bonafide business expenses abroad. remittance on account of charter hire of foreign ships.  Retention quota for service exporters: Service exporters may retain 5% of their repatriated income in foreign currency accounts. remittance of pre-shipment inspection fees. issue of bank guarantee/performance bond on account of the merchandise exporters of Bangladesh in favour of foreign buyers. remittance of bonafide expenses incurred by Bangladesh Biman and Bangladesh Shipping Corporation in foreign ports/stations. quality claim.

approximately 12 percent of GDP in Bangladesh. More importantly. 7.7 million workers to over 140 countries during a period of more than three decades since the mid-1970s. RESTRICTIONS ON AMOUNTS THAT CAN BE TAKEN OUT OF THE COUNTRY 7. term loan can not exceeds 50% of the paid up capital.5.2. in case of 100% foreign owned companies.1. However. 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. inspired by high oil prices at around $100 a barrel.17 billion in the year 2011. to some extent. eased unemployment pressures on the over-burdened labor market in this highly populated country. Chartered Accountants 7. REPATRIATION OF EARNINGS AND ROYALTY PAYMENTS 7. IMMIGRANTS Bangladesh has sent more than 6. For expatriate employment the guidelines are as follows:  Nationals of the countries recognized by Bangladesh are considered for employment. 80 percent of whom working in the oil-rich Middle East.3. offering the government a much-needed cushion against dwindling foreign exchange reserves and exchange rate volatility. P a g e | 25 Doing Business in Bangladesh 2012 .Howladar Yunus & Co.000 due to opening of new jobs. 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. the remittance transfers received from thesemigrant have reached a phenomenal level of over 10 billion US dollar in 2009. Key Middle East countries need more foreign workers now as they are taking more development projects. the outflow of migrant workers surged 45 percent to a two-year high at 568. Private sector industrial enterprises (outside EPZ). During 2011.6 million Bangladeshi migrants. Remittances grew 10 percent in 2011 from the previous year. 7. This mass movement of temporary migrant workers has. Most of these workers temporarily migrate to work in Middle East and Southeast Asia. Remittance inflows hit a decade high of $12. The latest growth in remittances comes as more workers are joining the bandwagon of more than 7.4. CONTRACT WORKERS/TEMPORARY RESIDENTS Work Permit Work permit for foreign nationals is required for employment in Bangladesh.

BOI imposes a ceiling of USD 50. 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. the expatriate investors and employee must arrive in Bangladesh with ‘PI’ and ‘E’ types’ visa respectively obtainable from concerned Bangladesh Mission in abroad.Howladar Yunus & Co. if that joint venture asks for work permit in favor of its expatriate employees.  For obtaining new Work Permit. 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.   Application for Expatriate Work Permit must be submitted to BOI within 15 (fifteen) days from the date of arrival. 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.org.000 for investment in joint venture by the Foreign Shareholders. No prior Bangladesh Bank approval is necessary for such remittances. 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. Prescribed application form has to be collected from BOI or may be be downloaded from BOI website www. Decision of the Board of Directors of the concerned company for new employment/ extension has to be furnished.  Furthermore. Chartered Accountants      Employment of expatriate personnel is considered only in industrial establishments and commercial enterprises duty sanctioned / registered by the appropriate authority.boibd. Doing Business in Bangladesh 2012 P a g e | 26 . 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).

Turnover tax at the rate of 3% is leviable where annual turnover is less than Tk. Chartered Accountants 8. OTHER FORMS OF TAXATION 8. PROPERTY TAXES A property tax is somewhat similar to a wealth tax. 8. and private firms and forests lands. Supplementary Duty (SD) is applicable as per 3rd Schedule of the VAT Act. Only a certain portion of an individual’s tangible wealth is taxed at a certain rate. Section 14 (goods/service declared by the government). 8. land. family home. Doing Business in Bangladesh 2012 P a g e | 27 . 1931. investment property. A uniform VAT rate of 15% is applicable for both goods and services. except in the cases specified.Howladar Yunus & Co. which is often a flat rate. VAT is imposed on services provided in Bangladesh and also on the services rendered from the outside Bangladesh. 1991. etc. 1st and 2nd Schedule of the VAT Act. supply. 60 million. 15% VAT is applicable for all business or industrial units with an annual turnover of Tk. STAMP DUTY Stamp duty is one of the main source of Government revenue collection. SALES TAX/VAT          VAT is imposed on goods and services at stages of import stage.3. but is not limited to. Truncated rate also applied in the cases specified by VAT laws which has been determined on the basis of assumed percentage of value addition. All matters relating to stamps are regulated through The Stamp Act. A registered person is entitled to claim back the VAT paid on purchase of inputs subject to compliance with the provisions of VAT laws. 60 million and above. but may vary under different circumstances or jurisdictions. and trading. manufacturing. The tax base may include. Exemption of VAT or imposition of VAT @0% is regulated by Section 3 (Export or Deemed Export). Stamp duties are applicable on the following:      Agreements & contracts Notes Certified copies Documents Land registration. 1899 and Stamp Manual.1. 1991.2. a variety of assets such as real estate.

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

5. The import of a number of products is the sole reserve of nominated government trading organizations. FRINGE BENEFIT TAX When an employee receives benefits from an employer. Some engineering products must comply with established technical standards and require an inspection certificate issued by a recognized organization. TARIFFS A tariff may be either tax on imports or exportsor a list or schedule of prices. 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. Foreign exchange is controlled by the Bangladeshi. Ministry of Commerce. All imports must be supported by a letter of credit. 8. Penalties for the smuggling of illegal narcotics are severe. Bank in accordance with Foreign Exchange Control policy: Allocation is administered through authorised financial institutions.Howladar Yunus & Co. 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 . except for the import of capital machinery and raw materials for industrial use. the taxable benefits are subject to Individual Income Tax in Bangladesh. There is a short list of prohibited goods – most second-hand goods are included. Chartered Accountants 8. Import transactions are governed by regulations specified on the Bangladesh Import Policy Order (IPO) issued by the Chief Controller of Imports and Exports.6.

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

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

Chartered Accountants 10.1. 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 .Howladar Yunus & Co. SOURCES OF ASSISTANCE The government provides cash assistance / incentive for doing business in Bangladesh in some particular export oriented industries. 10.2. GRANTS AVAILABLE Cash Incentives are available in the following sectors. GRANTS AND INCENTIVES 10.

A typical apartment will rent for $800-$1. with a good range of expatriate housing readily available in centrally located apartments. For those visiting Bangladesh. houses for $1. Baridhara.2. Popular places to live in include Gulshan.000-$1.500 (luxury units).500 (luxury units). Rental Accommodation Expatriates in Bangladesh have found it to be an affordable. Most expatriates live in these areas. In addition there are a number of medium standard hotels and guest houses in Dhaka and Chittagong to accommodate the expatriates. Hotels Dhaka offers several 5 star hotels. safe and comfortable place to live in. HOUSING Expatriates living in Dhaka have found it to be an affordable. safe and comfortable place. and Banani.200-$1.1. Baridhara and Banani. A quality apartment rents for $700-$1. In several suburban areas.000/month. Luxury houses rent from $1.200/month. with acceptable expatriate housing readily available in centrally located apartments. These hotels provide deluxe accommodation.Vocational Education System Doing Business in Bangladesh 2012 P a g e | 33 . Many expatriates live in the Dhaka areas of Gulshan. health clubs and entertainment facilities. Dhaka offers several international standard hotels including the Dhaka Sheraton and the Sonargaon (a Pan-Pacific Hotel). Chartered Accountants 11.Howladar Yunus & Co. 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. EDUCATION The three main educational systems in Bangladesh: * General Education System * Madrasah Education System * Technical . QUALITY OF LIFE 11. restaurants. quiet and secluded housing are also available for rent.

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

maintain and supervise airports and regulate air traffic. railway and water.659 bridges and 6.8 km long Bangabandhu Bridge.948 Km road unders its control.Howladar Yunus & Co.691 km dirt road and 68. It has established a strategic link between the East and the West of Bangladesh.The Roads and Highways Department (RHD) manage several categories of road. i. among the various modes of transport. These are Dhaka. road. There are now 13 operational airports and Short Take-off and Landing (STOL) ports in Bangladesh.514 km (64. road transport system has been playing a significant role in transporting passengers and goods. Local Government Engineering Department (LGED) has so far constructed a total of 133. Comilla. Chartered Accountants Post-graduate education normally of 1-2 year duration is provided at the universities and selected degree colleges and institutions. The airline network is also extensive and effective. It is generating multifaceted benefits to the people and promoting inter-regional trade.3. COMMUNICATION AND TRANSPORT The transport sector of Bangladesh consists of a variety of modes. are widely used in carrying both passengers and cargo.498 bridges/culverts. The 4.823 km paved roads) upazila and union roads and 971. As of January 2010. Cox's Bazar. it is facilitating transmission of electricity and natural gas and has integrated the telecommunication links. Apart from quick movement of goods and passenger traffic. RHD has total length of 20. RHD also control a total number of 4. Air cargo and STOL services have been handed over to the private sector by the government.122 culverts. Road In Bangladesh. is the eleventh longest in the world. Barisal. which was opened to traffic in 1998. Of these. Doing Business in Bangladesh 2012 P a g e | 35 . Jessore. the airports at Dhaka. Air The Civil Aviation Authority is a public sector entity entrusted to construct. Chittagong and Sylhet serve international routes. Sylhet and Thakurgaon.e. 11 on regional highways and 57 on feeder roads) on its road network throughout the country. As the country is essentially a flat plain all three modes of surface transport. Rajshahi. Chittagong. RHD are currently operating about 161 ferry boats in 81 crossings (13 on national highways. 11. The national flag carrier Biman flies to 26 international and eight domestic destinations. Syedpur. Ishurdi.

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.33 km.04 km (Broad Gauge 659. The entire coast along the Bay of Bengal is 710 km long. Wherever there is a river and a village.Howladar Yunus & Co. has been an entry-port for at least 1.88 km) and a total of 440 stations at the end of the year 2008-2009. Bangladesh Railway had a total network of 2. These carry passengers and merchandise on a large scale. railway link between east and west zone has been established. The Mongla port in Khulna region serves the western part of Bangladesh. Chartered Accountants Rail About 32% of the total area of Bangladesh is effectively covered by railways.800.835. the oldest port. Dual Gauge 374.83 km and Meter Gauge1. a launch or steamer will play for trade. There are two major ports in the country. Chittagong. After inclusion of railway track over the Jamuna Bridge. Waterways Country made crafts are the most widely used carriers on the rivers. The alluvial flood plain formed by these rivers covers most of the country.000 years. The landscape of Bangladesh is dominated by about 250 major rivers which flow essentially north-south. Train services between Dhaka-Kolkata have been commenced on 14 April 2008 in order to establish communication between Bangladesh and India. Doing Business in Bangladesh 2012 P a g e | 36 .

Next Tk. 2.000 Next Tk. 400. 250. 300.000–For Individuals aged 65+ years.Howladar Yunus & Co.000 25% 10% of Applicable Tax If Total Net Worth exceeds Tk.000 Next Tk. 2 crore Doing Business in Bangladesh 2012 P a g e | 37 .000–For Female. First Tk. First Tk.000–For Disabled Individuals. 200. 200. 180. 300.000–For Male.000 Balance Income Minimum Tax Liability Non-resident Individuals Surcharge Rate Nil For Individuals/Sole Proprietorship/Partnership 10% 15% 20% 25% Tk. RATES OF TAX – INDIVIDUAL/SOLE PROPRIETORSHIP/FIRM Rates of Income Tax for the Assessment Year 2011-2012 Total Income First Tk. Chartered Accountants APPENDICES A. First Tk.

out of which maximum 5% could be Pre IPO Placement) Private Limited Companies including Non.50% If Dividend > 20%. Tax Rate 37.37. Tax Rate Insurance & Financial Institutions) 27.Howladar Yunus & Co. 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.50% publicly traded companies (except Bank. Tax Rate 37.5% 42.5% If declared Dividend not paid within the time specified by SEC. Insurance & Financial Institutions) Publicly Traded Companies (except Bank. Insurance & Financial Institutions Cigarette Manufacturing Company Dividend Income Doing Business in Bangladesh 2012 P a g e | 38 .50% 20% Bank.50% 42. Tax Rebate 10% If Dividend < 10%. Chartered Accountants B. If Dividend <20% but >10%.

000.00 or part after first 50.00.00.00 Additional for every 10. ii. @ BDT 200.000.200.00 ii.00 45. Certified Copies and to submit returns.00 up to 24. For the authorized share capital: Authorized Capital (BDT) Fee (BDT) Up to 20. For affixing on the Memorandum of Association: BDT 500.00.00 Registration fee i.000.00 or part after first 20.00 for each time extension application.000.00 Additional for every 1.00 up to 180. Chartered Accountants C. Stamps and Fees of Registration PRIVATE COMPANY (Companies Act.00 > 3.00 50. For time extension: @ BDT 100.000.00 10.000.00.000. For affixing on the Articles of Association: For Authorized Capital (BDT) Up to 10.00 per document): BDT 1.00 4.00 > 10.00.00.000.00 or part after first 10.000. 1994) Stamps i.00 Doing Business in Bangladesh 2012 P a g e | 39 .000.00.00. For NC clearance: @ BDT 600.00 for each of the proposed names.00 50.00 up to 3.00. For affixing on the Memorandum of Association: BDT 500.00.00 4.000.000.00 up to 3.00 Stamp (BDT) 2.000.00.000.00 ii.00 PUBLIC COMPANY (Companies Act.00 360.00. fees and stamps are to be provided as under: Fees of Name Clearance i.00 > 10.00 or part after first 50.000.00.00 10.00 up to 45. Registrar of Joint Stock of Companies and Firms (RJSC) FEES To apply for Name Clearance.000.00 Additional for every 10.00. 1994) Stamps i.000.Howladar Yunus & Co.000. Registration.00 Additional for every 10.000. For filing 6 documents (5 filled in forms plus 1 memorandum & articles of association.00 Stamp (BDT) 2.000.000.00.000.000. for affixing on the Articles of Association: For Authorized Capital Up to 10.000.00 ii.000.00.000.00 10.00.00 > 3.

Registration fee: BDT.00 TRADE ORGANIZATION (Companies Act.00 ii.00 or part after first 50.000.00 45.00 Doing Business in Bangladesh 2012 P a g e | 40 .00 PARTNERSHIP FIRM (Partnership Act. 110.00.00. 1994) i.00 or part after first 10.00. @ BDT 200.00 For >20 up to 100: BDT 1.00 FOREIGN COMPANY (Companies Act. 1932) i.00 ii.00 SOCIETY (Societies Registration Act. For filing 8 or 9 documents (7 or 8 filled in forms plus 1 memorandum & articles of association.00 360.000.000.00 up to 180.000.000.00 Additional for every 10.500.00 up to 24.00 50. For the authorized share capital: Authorized Capital (BDT) Fee (BDT) Up to 20.00 Additional for every 1. Registration Fee: BDT. @ BDT 200.00 50.00 For every 100 or part above the first 100 (limited member) BDT 150.00.200. For affixing on the Articles of Association: BDT 1.200.000.000.00 per document plus 1 memorandum & articles of association.00 For unlimited members BDT 4.800.00 or part after first 50. 1994) Stamps i.00. Chartered Accountants Registration fee i.00 Additional for every 10. For filing 6 document (1 memorandum and articles of association @ BDT 200. 1860 i.00 per document): BDT 1.00 10.00 and 5 other documents @ BDT 200.500.00 Additional for every 10. Registration Filing Fee: BDT. For the number of members of association: For up to 20: BDT 600.00): BDT 1.000.000. 0.500.600. for filing 6 documents (5 filled in forms @ BDT 200.00 per document): BDT 1. 250.00 up to 45.000.00 Registration fee i.000.Howladar Yunus & Co.00 ii.00 or 1.000.00 or part after first 20.

00 TRADE ORGANIZATION a. Late fee for filing any document beyond the schedule time: @ BDT 2.00 or part after the first 5.00 per document Doing Business in Bangladesh 2012 P a g e | 41 .00 or part after the first 50.00 Additional for every 5. For filing any document: @ BDT 200. For filing any document within the schedule time: @ BDT 200.00.00 Additional for every 5.00 60.00.00. Registration of Mortgage.00 per document.00 upto 120.00.00 or part after the first 5.00 50.00.00 150.00 FOREIGN COMPANY a.00 per document.00 50.000.00.00 60.000.00 upto 120. Debentures and Charges Secured Amount (BDT) Fee (BDT) upto 5. Late fee for filing any document beyond the schedule time: @ BDT 2.00 or part after the first 50. For filing any document within the schedule time: @ BDT 200.00.000.000.000.00.000.000.00 60.00 per document ii.00.000. Returns Filing i.00 Additional for every 5.Howladar Yunus & Co.00 Additional for every 5.00.000.00 SOCIETIES i.000.000.000.00.00.000.000. Late fee for filing any document beyond the schedule time: @ BDT 2.00 per day not exceeding BDT 1.00 per document b.00.000.000.00 per day not exceeding BDT 1. Registration of Mortgage.000.00.00. Returns Filing i. Registration of Mortgage.00.000.00.00 Additional for every 5.00 200. For filing any document within the schedule time: @ BDT 200. b. Debentures and Charges Secured Amount (BDT) Fee (BDT) upto 5.00 150.00 Additional for every 5.00.000.000.00 upto 120.00 per document ii.00 per document ii. Returns Filing i.00 per day not exceeding BDT 1.00 or part after the first 5. Chartered Accountants Fees of Returns Filing COMPANIES (Private & Public) a. b.00 50.00 or part after the first 50. Debentures and Charges Secured Amount (BDT) Fee (BDT) upto 5.000.

00 subject to a minimum of BDT 100. For inspection of records: BDT 100. Identified by the effective date For copy of Address : BDT 20. For copy of certificate of incorporation: BDT 100.00 c.00 ii.00 For copy: BDT 0.Howladar Yunus & Co.00 iii. Stamps and Fees of Issuance of Certified Copies Private Company. For Private and Public Company: BDT 20. For Trade Organization and Foreign Company: BDT 10. For copy of certificate of commencement of business: BDT 100.50 for each 100 words or part thereof Partnership firm a.per application per company: BDT 20. For copy: BDT 0. For Memorandum of Association or part thereof: BDT 20. Chartered Accountants PARTNERSHIP FIRM i. Copying of documents for each 100 words or part: @ BDT 5. 5 or 6: BDT 4. For Inspection of documents: BDT 1.00 ii.00 subject to a minimum of BDT 100.00 v.50 ii. For Articles of Association or part thereof: BDT 20.00 b. For filing Form -2.00 Doing Business in Bangladesh 2012 P a g e | 42 .00 For copy of Alteration of Name: BDT 20.00 each. Non-judicial stamp i. Trade Organization and Foreign Company a.00 ii.00 iv.50 for each 100 words or part thereof Fees of Winding Up i.50 For copy of Annual list of Managing Body: BDT 20. Fees i.00 of each document Society a.00 iii. Court fee (stamp) . For each of other document : BDT 20.00 b. Public Company. Identified by the effective date i. Comparison of document each 100 words or part: @ BDT 5. Identified by the applicable year For Inspection of documents: BDT 1.

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