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Doing Business

in Bangladesh
Doi ng
Bu si ness i n
Ba ngl a d esh
Howladar Yunus & Co.
Chartered Accountants
Feb r u a r y 20 12
Howladar Yunus & Co.
Chartered Accountants
Doi ng Bu si ness in Ba ngl a d esh 20 12 P age| 2
Page Chapter Contents
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2.0 Disclaimer
3
3.0 Introduction
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4.0 The Country
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5.0 Forms and Business Enterprises
18
6.0 Direct Taxation
21
7.0 Exchange Control
27
8.0 Other Forms of Taxation
30
9.0 Labour Relations and Social Security
32
10.0 Grants and Incentives
33
11.0 Quality of Life
37
- Appendix A : Rates of Taxes
38
- Appendix B : Rates of Taxes - Companies
39
- Appendix C : RJSC Fees
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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 circumstancesor 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.
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4. THE COUNTRY
4.1. GEOGRAPHY/STATISTICS
Bangladesh is located in the Southern Asia, bordering the Bay of Bengal with the coastline covering 580
km between Burma & Indiawith the landboundaries 4,246 km whereBurma covered 193 km and India
covered 4,053 km. The time difference is GMT+6. The Total area is147,570sq km and the total
population is 164,425,491.The climate of the country is focused as tropical; mild winter (October to
March); hot, humid summer (March to June); humid, warm rainy monsoon (June to October). Official
language is Bangla (Bengali). English is widely used in Government, Business and Universities. Out of
total population, Muslim 89.6 %, Hindu 9.3 %, Buddhist 0.5%, Christian 0.3%and Other 0.3%.
4.2. ECONOMY
The economicposition of the country is GDP/PPP (2011 est.): $100 billion; per capita $664, Real growth
rate: 6%, Inflation: 11.3%. The Industries are Textiles, Jute, Garments, Tea Processing, Paper Newsprint,
Cement, Chemical Fertilizer, Light Engineering, Sugar, Ceramics and Pharmacy. Natural resources are
Gas, Timber and Coal. Arable land covered55.39%and permanent crops covered3.08%of total land
area. Bangladesh exports mainly Ready Made Garments including Knit Wear (75%of exports revenue).
Others include: Shrimps, Jute Goods (including Carpet), Leather Goods and Tea. Bangladesh imports
mostly Petroleum Product and Oil, Machinery and Parts, Soybean and Palm Oil, Raw Cotton, Iron, Steel
and Wheat.
4.3. CURRENCY AND BANKING
Currency of the country is Bangladeshi Taka (Tk). The financial system of Bangladesh consists of
Bangladesh Bank (BB) as the central bank, 4 State Owned Commercial Banks (SCB), 5 government owned
specialized banks, 30 domestic private banks, 9 foreign banks and 29 non-bankingfinancial institutions.
The financial system also embraces insurance companies, stock exchanges and co-operative banks.
Bangladesh Bank is both the Governments banker and the bankers bank, a Lender of the Last Resort.
Bangladesh Bank, like most of the central banks of different countries, exercises monopoly over the
issue of currencyand thebanknotes.
4.4. GOVERNMENT/POLITICS
The conventional long form isPeople's Republic of Bangladesh and the conventional short formis
Bangladesh. The government type is parliamentary democracy. Capital isDhaka and the
administrative 7 divisions are Barisal, Chittagong, Dhaka, Khulna, Rajshahi, Rangpur and Sylhet. 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.
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4.5. LEGAL SYSTEM
Bangladesh seceded from Pakistan in December 1971. 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, but legal developments since 1972 have been distinct.
Constitution adopted 4 November 1972. 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, a
rigid constitution has been adopted which came into force on 16 December 1972. The basic law of
Bangladesh is the constitution of the People's Republic of Bangladesh, 1972 as amended from time to
time. Till 2010, fifteen amendments to the constitution have been made. 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. The laws enacted by the legislature and now in operation regulate almost
all spheres of life. Ordinarily executive authorities and statutory corporations cannot make any law, but
can make by-laws to the extent authorized by the legislature. Such subordinate legislation is known as
rules or regulations. Unless found ultra vires of the parent law, such rules or regulations are also
enforceable by the court like the laws made by the legislature. Important laws of the country may be
classified under some broad heads such as land and property laws, personal laws, commercial laws,
labour and industrial laws, election laws, law of crimes, service laws, fiscal laws, press laws and laws
relating to the remedies.
All laws, rules or regulations made by the competent authority are applied in the Courts and Tribunals.
The Courts can be classified into two classes viz. the Supreme Court and; Subordinate Courts and
Tribunals. The Supreme Court of Bangladesh is the apex court with its two divisions, the High Court
Division and the Appellate Division. As the apexcourt the high court division has been vested with the
power to hear appeals and revisions from subordinate courts, 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. 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.
In addition, there are various other laws on different subjects regulating different fields and spheres of
activities of national life. To seek remedy a person has to file a case before the appropriate court or
authority. Claims regarding money, 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, 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. The police investigates the cases lodged with the police
station and produces witnesses before the court during trial. On the other hand, 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 other authorities before which remedies may
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be sought by an aggrieved party. Those authorities are administrative authorities or tribunals. Except in
respect of enforcement of fundamental rights, admiralty, company matters and writ petitions, relief
cannot be sought directly from the high court division which mainly deals with appeals and revisions
from the decisions of the subordinatecourts.
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. For example,
there are labour courts and labour appellatetribunals to decide labour disputes, administrative tribunals
and administrative appellate tribunal to decide service disputes of public servants, income tax appellate
tribunal to decide income tax disputes, custom, excise and VAT Appellate tribunal to decide disputes
regarding custom and excise duties and VAT, court of settlement to decide disputes about abandoned
properties, special judges to try corruption cases against public servants, 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. To decide election disputes the election tribunals are
constituted with judicial officers. Family courts have been constituted with assistant judges to decide
family disputes. To decide money claims of the banks and other financial institutions ArthaRinAdalats
have been set up presided over by judges, and insolvency courts have been set up presided over by
district or additional district Judges to declare defaulting borrowers as insolvent. To try offences
committed by children below the age of 16 years, juvenile courts have been formed with the
magistrates and sessions judges, and juvenile courts follow the special procedure laid down in the
children's Act.
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5. FORMS OF BUSINESS ENTERPRISE
5.1. SOLE PROPRIETORSHIP
Definition
In the sole proprietorship, known alternatively as sole tradership, the proprietor is to take all risks. Some
of the favourable characteristics of a sole proprietorship business are the ease of initiation, low cost of
commencement, freedom in keeping liability to certain limits, right to control, ease of winding up,
minimum legal restrictions, liberty in making quick decisions and the like. The sole trader bears
unlimitedliability.
A sole trader-ship business has no legal identity other than that of its owner. Most sole proprietors
conduct small businesses such as retail shops that sell stationary, groceries, cloth, medicines,
handicrafts, books, confectioneries, spare parts, and tyre/tube, wholesale stores. Many operate
amusement business, and service marketing such as hotels, restaurants, guesthouses or tailoring, hair
dressing, road, and water transportation. Sole trader-shipsin Bangladesh are usually classified as small,
medium and large depending on the size of capital employed.
Principle Legislation
All the laws related to an individual areapplicable to a sole proprietorship.
General Requirements to Start a Sole ProprietorshipBusiness:
Trade License from City Corporation/Municipality/Union Council (Local Government Bodies);
Taxpayers 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), local investor you may setup a business under
several organizational structures such as single proprietorship, partnership and limited company. In
the case of a foreign investor, one may establish its business only under limited company.
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5.2. 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), with the
intention of making and sharing profits among themselves. A partnership can arise only as a result of an
agreement or contract, expressed or implied, between the partners. In Bangladesh, a partnership firm is
to be formed under the provisions of the Partnership Act 1932. By definition, 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. A non-profit making association is not a partnership in law of Bangladesh. In
general, institutions or associations cannot be a member of a partnership.
The Partnership Act 1932 does not require a partnership deed or agreement to be registered. The
registration of such firm is optional. But if registered, a partnership firm can enjoy some legal rights and
facilities. A partnership deed includes the name of the firm, nature of business, thecapital and property
of the firm, the capital of individual partners, term of partnership, provision for salaries, and drawings
on account of profit, rate of interest (if any) on partners' capital, advances and drawings, rights and
duties of individual partners, provision for accounts and audit, division of profits and losses (capital and
revenue), powers of admission and expulsion of a partner, termination of agreement by insolvency,
death, etc., valuation of goodwill and share of assets on sale or death, and an arbitration clause.
If a partnership business is not registered, 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. Also, an
unregistered firm can not file a suit, or take other legal proceedings, to enforce a right from a contract,
or to claim a set-off in any suit filed against it. However, 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.
Principle Legislation
The Partnership Act, 1932;
General Requirements to Start a PartnershipBusiness:
The Partnership Deed;
Minutes of Partners Meeting;
Trade License from City Corporation/Municipality/Union Council (Local Government Bodies);
Taxpayers 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
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Membership of Trade Body
As per publication of Board of Investment (BOI), local investor you may setup a business under
several organizational structures such as singleproprietorship, partnership and limited company. In
the case of a foreign investor, one may establish its business only under limited company.
5.3. LIMITED PARTNERSHIP FIRM
In Bangladesh, Limited Partnership Firm in Bangladeshis not realistically available.
5.4. BRANCHE/LIASION/REPRESENTATIVEOF 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. A branch office refers to an establishment which carries on
substantially the same business and activity as is carried out by its Head Office. Branch offices help in
expanding the size of the market for a company's product by attracting more customers; widening the
scope of its trading and manufacturing activities as well as bringing more opportunities and opening
unexplored avenues for it. Thus, these offices help to fuel the growth of the company and enhance its
profitability on a sustained basis.
The activities of Branch/Liaison/Representative office of a foreign entity shall remain confined to those
as set forth in the permission of BOI. The said offices shall strictly follow the foreign exchange
regulations of the government of Bangladesh. Generally, no outward remittance of any kind from
Bangladesh sources by the said offices is allowed except the cases permitted by the foreign exchange
regulations. 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. Security clearance is required
to be obtained from Ministry of Home, government of Bangladesh. Such offices shall have to bring
inward remittance at least USD 50,000 within 2 (tow) months from the date of the issue permission
letter as establishment cost and 6 months operational expenses.
Principal Legislation
The Investment Board Act, 1989;
Rues & Regulations of Board of Investment (BOI);
The Companies Act, 1994;
The Foreign Exchange Regulation Act, 1947
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General Requirements to Open Branch/Liaison/RepresentativeOffice 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 close a Branch Office/Liaison Office/
Representative Office in Bangladesh by an application with audit report, updated tax payment
certificate, NOC from Bangladesh Bank etc. and required formalities with RJSC shall have to be
performed. 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. 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.
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 withthe following documents:
Prescribed Application From, duly filled in, signedand stamped;
Memorandum of Association (MOA) and Articles of Association (AOA) of the Principal Company;
Certificate of Incorporation;
Name and Nationalities of the Directors/Promoters of the Principal Company;
Board Resolution to open a Branch/Liaison/Representative Office in Bangladesh;
Audited Accounts of the last financial year;
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. Embassy/High Commission of the applicant's country of origin or Apex Chamber of Commerce of
the country of origin.
Bangladesh Bank (BB)
Afterwards, permission is sought from Bangladesh Bank for opening branch/liaison Office in Bangladesh
by foreign entities including airlines, companies, firms under Section 18B of the Foreign Exchange
Regulation Act, 1947.
Registrar of Joint Stock Companies(RJSC)
Foreign Combines which establishes a place of business in Bangladesh shall, within one month of the
establishment of the place of business, 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; 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;
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(c) a list of the directors and secretary, if any, of the company;
(d) the name and address or the names and addresses of one or more persons resident in Bangladesh,
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;
(e) the full address of the office of the company in Bangladeshwhich to be deemed its principal place of
business in Bangladesh.
5.5. LIMITEDCOMPANIES
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. Limited companies may be limited by
shares or by guarantee. And the former of these, a limited company limited by shares, may be further
divided into public companies and private companies.
Business in Bangladesh may be carried on by a company formed and incorporated locally or by a
company incorporated abroad but registered in Bangladesh. The incorporation or registration is done by
the Registrar of Joint Stock Companies and Firms under the provisions of the Company's Act 1994.
Companies could be classified in following categories:
a. Company Limited by Shares
i. Public Limited Company and
ii. Private Limited Company
b. Company Limited by Guarantees;
c. Unlimited Company
Private Limited Company:
Restricts the rights to transfer the shares;
Limits the number of its members to minimum 2 and maximum 50 excluding the persons employed
in 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.
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,
the Securities and Exchange Ordinance, 1969and the Securities and Exchange Commission Act, 1993
as amended from time to time.
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Has minimum 7 members but there is no maximum limit.
Has at least 3 Directors.
May a private company converted into a public company.
Unlimited Company:
An unlimited company refers to a company having no limit on the liability of its members.
Principal Legislation
The Companies Act, 994;
The Securities and Exchange Ordinance, 1969;
The Foreign Exchange Regulation Act, 1947;
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, 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.
An application in plain paper along with nominal required fees is be submitted to the RJSRF for
verification and clearance of the proposed name.
Memorandum of Association (MOA):
MOA states the name of the company, whether it is public or private limited and the location of
the registered office at the company. The MOA should clearly spell out the main objectives, the
authorized capital, the divisions of this capital into shares of fixed amount and liability of its
members.
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. These articles are subordinate to and controlled by MOA.
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.
Chief Inspector of Factories and Establishment
Any manufacturing company employing 10 (ten) or more workers is required to be registered under the
Labour Act, 2006 with the office of the Chief Inspector of Factories and Establishment. The act is
primarily to regulate working conditions and to ensure safety in the factory.
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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)
5.6. TRUSTS
Description
A Trust is an obligation annexed to the ownership of property, and arising out of a confidence reposed
in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of
another and the owner The person who reposes or declares the confidence is called the Author of the
Trust. The person who accepts the confidence is called the Trustee. The person for whose benefit the
confidence is accepted is called the Beneficiary. The subject-matter of the trust is called Trust-
property or Trust-money. The Beneficial interest or Interest of the beneficiary is his right against
the trustee as owner of the trust-property; and the instrument, if any, by which the trust is declared is
called the instrument of trust.
A breach of any duty imposed on a trustee, as such, by any law for the time being in force, is called a
Breach of trust
And in the Trust Act, 1882, unless there be something repugnant in the subject or context, Registered
means registered under the law for the registration of documents for the time being in force. 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. The salient features of Trust are as follows:
In every trust deed, the minimum and maximum number of trustees has to be specified.
The trust deed should clearly spell out the aims and objects of the trust, how the trust should be
managed, how other trustees may be appointed or removed, etc.
The trust deed should be signed by both the settlor/s and trustee/s in the presence of two
witnesses.
The trust deed should be executed on non-judicial stamp paper, the value of which would
depend on the valuation of the trust property.
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Principal Legislation
The Trust Act, 1882;
The Societies Registration Act, 1860;
The Companies Act, 1994;
The Registration Act, 1908;
General Requirements to Set Up aTrust:
The application for registration should be made to the official having jurisdiction over the region
in which the trust is sought to be registered.
After providing details (in the form) regarding designation by which the public trust shall be
known, names of trustees, mode of succession, etc., the applicant has to affix a court fee stamp
of specified amount, depending on thevalue of the trust property.
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 application
form should be submitted, together with a copy of the trust deed.
Two other documents which should be submitted at the time of making an application for
registration are affidavit and consent letter.
5.7. JOINT VENTURES
Description
Joint venture (JV) is a business agreement in which parties agrees to develop, for a finite time, a new
entity and new assets by contributing equity. They exercise control over the enterprise and
consequently share revenues, expenses and assets. There are other types of companies such as JV
limited by guarantee, joint ventures limited by guarantee with partners holding shares.
Principal Legislation
The Companies Act, 1994;
The Investment Board Act, 1989;
The Foreign Investment Promotion and Protection Act, 1980
General Requirements to Set Up aJoint Venture:
Joint venture agreement
Application Form
Trade License
Limited Company :
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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, 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, Suppliers' Credit, deferred payment, PAYE Scheme, etc.
Recommendation for import of machinery and raw materials.
Issue of work permit.
Remittance of Royalty, 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. The equity
that is brought in is allowed to repatriate from the country with the dividend earned.
Remittance of the equity, dividend and royalty technical assistance
The equity can be remitted while the company decided to exit the country. The dividend
earned each year can be remitted based on the necessary documentation and approval. The
royalty and technical assistance can also be remitted based on the documents and criteria
fixed by the government.
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.
b) Private lands: The private lands can be scouted by the investors itself. A foreign company can
own land in its name.
c) Govt. owned land: The investor can seek for Govt. owned land (khas land). He can mention for
certain land in a district (regional centre) and can sought support of BOI. BOI can request the
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respective Deputy Commissioner (DC), who is the administrative head of the district, for providing
that land.
100%Foreign Investment in a Business
100% foreign equity may be allowed in all areas of investment under Companies Act 1994.
However, Private investment (local as well as foreign) is restricted in four sectors on strategic
grounds as mentioned in the Industrial Policy-2010.
BOI approval/registration for commercial enterprises
For commercial enterprises BOI approval/registration is not needed. They must register under
concern law and proper authority.
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;
Securing Trade License;
Plant Setup;
Registering with BOI;
Joint Venture and 100%Foreign Investment proposal in the Private Sector;
Self-financed local investment proposals including industries sanctioned/financed by financial
institutions or commercial banks;
Permission for setting up joint venture industrial units with public sector corporations;
Obtaining Industrial Plot;
Registration/Approval for Foreign Loan, Suppliers Credit, PAYE Scheme etc.;
Obtaining Utility Connection Import of Spare Parts and Raw & Packaging Materials;
Obtaining Work Permit;
Registration with Factories Act;
Registration with Environmental Legislation;
Remittance of Royalty, Technical Know-How and Technical Assistance Fees;
Commercial Operation
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5.8. CO-OPERATIVES
Description
Co-operative is a business organization owned and operated by a group of individuals for their mutual
benefit. A cooperative can also be defined as "an autonomous association of persons united voluntarily
to meet their common economic, social, and cultural needs and aspirations through jointly owned and
democratically controlled enterprise". 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.
To uplift the status of the poor people living in the rural areas, the government of Bangladeshset up the
Rural Development and Cooperative Division ( RDCD ) under the Ministry of Local Government, Rural
Development and Cooperatives. This Division is responsible for policy formulation, planning, monitoring
and administration of rural development and cooperative initiatives of the country. 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 action-
research programs.
Principal Legislation
The CooperativeSocietiesAct, 2001;
TheCooperative Societies Rules, 2004
General Requirements to Set Upa 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);
For banking and unlimited liability cooperatives some financial conditions have been imposed;
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6. DIRECT TAXATION
6.1. INCOME TAX INDIVIDUALS/SOLE PROPRIETORSHIP/PARTNERSHIP FIRM
Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more he should
pay''- is the basic principle of charging income tax. Tax is levied on income but taxability of a person is
determined on the basis of his residential status. 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, shall be
deemed to be resident, Otherwise, a non-resident. Non-resident except a Bangladeshi non-resident has
to pay tax at the maximum rate of 25%irrespective of total income. Moreover, a Non-Resident shall not
be entitled to any sort of tax rebate like investment tax rebates etc. The last date for submission of
income tax return, unless extended by competent tax authority, by the thirtieth day of September next
following the income year.
6.2. INCOME TAX COMPANIES
No distinction is made for the purposes of corporate income tax between foreign owned companies and
Bangladeshi-owned companies, although some firms may qualify for a tax holiday in the initial years
after entering Bangladesh. A Company is obliged to submit income tax return by fifteenth day of July
next following the income year or, where the fifteenth day of Julyfalls before the expiry of six months
from the end of the income year, before the expiry of such six months.
Consequences of Non-Submission of Return
Imposition of penalty amounting to 10%of tax on last assessed income subject to a minimum of
Tk. 1,000/-
In case of a continuing default a further penalty of Tk. 50/- for every day of delay.
Assessment Procedures:
For a return submitted under normal scheme, assessment is made after hearing.
For returns submitted under Universal Self-Assessment Scheme, the acknowledgement slip is
determined to be an assessment order. Return filed under Universal Self -Assessment is of
course subject to audit.
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6.3. TAX ON CAPITAL GAINS
Capital Gain from the Transfer of Listed Shares
Capital gains arising on the sale or transfer of non-government securities, including stock and
shares of public companies listed on the Bangladesh stock exchanges are exempted from
income tax in the case of individual.
Capital gainshall be taxed @ 10% in the case of capital gain earned by a Company;
Tax shall be imposed on Capital gain@ 5%if the transferor is a sponsor, shareholder or director
of a bank, financial institution, merchant bank, insurance company, leasing company, portfolio
management company, stock dealer or stock broker company;
Capital gain earned by a shareholder who holds shares morethan 10%in the listed companyat
any time during the income year shall be taxed @ 5%;
Capital Gain from the Transfer of Other Capital Assets
In the case of a company, tax at the rate of fifteen per cent on the Capital Gain;
In the case of a person other than a company,if the capital assets disposed after not more than
five years,capital gain shall be included in the total incomeand will be taxed accordingly;
In the case of a person other than a company,if the capital assets disposed after five years, tax
payable on the capital gains at the rate applicable to his total income including the said capital
gains, or tax at the rate of fifteen per cent on the amount of the capital gainswhichever is the
lower;
6.4. WITHHOLDING TAXES
In Bangladesh withholding taxes are usually termed as Tax deduction and collection at source. This
system is considered as an important mechanism of tax collection. 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. The taxpayer receives a certificate from
the withholding agent and gets credits of tax against assessed tax demand on production of the
certificate.
Salient Features of Withholding Tax:
Chapter VII (Payment of Tax Before Assessment Section), particularly Sections from 48 to 56,
provides for the income from which tax shall be deducted or collected at source.
Every company is required to file a returnof withholding tax so collected or deducted in each
quarter;
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In the event of failure to deduct, collect or pay, or failure fails to pay the tax so deducted or
collected, the person shall be deemed to be an assessee in default and pay an amount at the
rate of 2%per month;
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 exceedingthe amount in arrear;
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 taxand VAT;
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;
6.5. GIFTS TAX
In Bangladesh, thereare no specified tax regulations on Gifts tax.
6.6. DEATH DUTIES
Currently, the Bangladesh authorities have not imposed death duties or estate duties.
6.7. TAXATION OF FOREIGN ENTERPRISES AND OPERATIONS
There are no specific tax benefits for foreigncompanies and operations on Bangladesh. Tax rates will be
applicable as local companys tax rate.
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7. EXCHANGE CONTROLS
On March 24, 1994 the Bangladesh Taka was declared convertible for current account transactions in
terms of Article VIII of the IMFArticles of Agreement.
The declaration symbolized a turning point in the countrys exchange management and exchange rate
systems. The period preceding this declaration saw an intensification of reforms undertaken by
Bangladesh Bank to ease controls on foreign payments and exchange rate arrangements. These reforms
and the subsequent further changes have been summarized in the following paragraphs.
Investment in Bangladesh:
With the exception of a few reserved sectors, foreign investors are free to make investments in
Bangladesh in industrial enterprise. An industrial entity may be set up in collaboration with local
investors or may even be wholly owned by the foreign investors. No permission is needed to set up such
enterprises if the entrepreneurs use their own funds. However, to avail of facilities and institutional
suport provided by the government, entrepreneurs/sponsors are advised to apply for registration with
the Board of Investment (BOI). For items in the control list, the office of the Chief Controller of Imports
& Exports (CCI & E) prescribes the basis and conditions of import entitlement.
Shares may be issued in favour of foreign investors against capital machinery brought into Bangladesh.
For issuance of shares against foreign investment in the form of capital machinery, the exchange control
copy of bill of entry evidencing clearance of the capital machinery from the Custom Authorities, copies
of the relative import permit, invoice and bill of lading are required.
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.
They may also invest in new, yet-to-be-listed public issues of Bangladeshi shares/securities. In
such cases investors are not required to transact through any registered broker/member of
stock exchange. 5%shares of Initial Public Offering (IPO) of a company is reserved for Non-
Resident Bangladeshi (NRB). 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. Over subscription can be repatriated after completion of formalities.
Permission of Bangladesh Bank is not required for issue and transfer of shares in favour of non-
residents against their investments in joint ventures in Bangladesh.
Non-resident share holders can freely transfer their shares to other non-residents.
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Remittance of profits:
Branches of foreign firms/companies including foreign banks, 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 of dividend/capital gain:
Prior permission of BangladeshBank is not required for:
remittance of dividend income to non-residents in respect to their investments in Bangladesh;
remittance of dividend declared out of previous year's accumulated reserves; and
dividend and sale proceeds (including capital gains) of shares of companies listed in a Stock
Exchange in Bangladesh. 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. Remittance of sale proceeds of shares of companies not listed in Stock Exchange
requires prior Bangladesh Bank permission, which is accorded for amounts not exceeding the
net asset values of the shares.
Remittanceof royalty/technical fees:
Industrial enterprises may enter into agreements for payment of royalties, technical know-
how/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 years sales of the enterprises
as declared in their tax returns, or (b) 6%of the cost of imported machinery in the case of new projects.
These agreements, however, need to be registered with the Board of Investment (BOI). Agreements not
in conformity with these general guidelines require prior permission of the BOI. ADs may remit the
royalties, technical know-how/technical assistance fees payable as per agreements registered
with/approved by BOI, without prior approval of Bangladesh Bank.
Remittance on account of trainingand 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.
Remittance by shipping lines, airlines, courier service companies:
Foreign shipping lines, airlines and courier service companies may send abroad, through an AD, funds
collected in Bangladesh towards freight and passage, after adjustment of local costs and taxes, if any.
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Foreign and Local Borrowings
Foreign loans:
Industrial enterprises in Bangladesh (local, foreign or joint venture) may borrow abroad with
prior Board of Investment (BOI) approval. 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.
Local borrowings:
Banks in Bangladesh may extend working capital loans or term loans in local currency to foreign-
controlled or foreign-owned firms/companies (manufacturing or non-manufacturing) operating
in Bangladesh on the basis of normal banker-customer relationship, 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.
Convertibility on Trade Account
Bangladesh Taka is fully convertible for settlements of trade related transactions. Import licence is not
required for import of items not in the control list. An importer has automatic access to foreign
exchange for import of all items outside 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.
Exchange Facilities for Exporters
New Exporters:
Annual foreign exchange quota for business travel abroad for new exporters has been set at US
$ 6000. Bonafide requirement beyond US $ 6000 is accommodated by Bangladesh Bank upon
written request submitted with supporting documentation.
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$, Euro, Japanese Yen. For export items with high import contents (such
as naptha, furnace oil, bitumen, readymade garments etc.), the retention quota is 10%. The
computer software and data entry/processing service exporters may also retain up to 50%of
realised export proceeds in foreign currency accounts. Funds from these accounts may be used
to meet bonafide business expenses, such as business visits abroad, participation in export fairs
and seminars, import of raw materials, machineries and spares etc. Funds from these accounts
may also be used to set up offices abroad without prior permission of Bangladesh Bank.
Exporters may, at their option, retain the foreign currency in interest bearing renewable term
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deposit accounts in Bangladesh with a minimum amount of USD 2,000 or Pound Sterling 1,500
equivalent.
Retention quota for service exporters:
Service exporters may retain 5% of their repatriated income in foreign currency accounts. Funds
may be drawn from these accounts to meet expenses for bonafide business expenses abroad.
This quota may also be kept in interest bearing renewable term deposit accounts. However,
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.
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;
issue of bank guarantee/performance bond on account of the merchandise exporters of
Bangladesh in favour of foreign buyers;
remittance on account of short weight, quality claim, partial shipment etc. upto 10%of realised
export proceeds.
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 premia on foreign currency policies taken by Bangladesh nationals while residing
abroad,
remittance of premia on account of re-insurance,
remittance of General Average collected from consignees in Bangladesh,
remittance of pre-shipment inspection fees,
remittance of bonafide expenses incurred by Bangladesh Biman and Bangladesh Shipping
Corporation in foreign ports/stations,
remittance on account of charter hire of foreign ships,
remittance of purchase price of ships acquired by private firms/companies,
remittance of royalty/honoraria/fees to non-residents including foreign news agencies for
features, articles etc. subscribed by local newspapers/magazines,
advertising of Bangladeshi commodities in mass media abroad.
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7.1. REPATRIATION OF EARNINGS AND ROYALTY PAYMENTS
7.2. RESTRICTIONS ON AMOUNTS THAT CAN BE TAKEN OUT OF THE COUNTRY
7.3. 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. However, term
loan can not exceeds 50%of the paid up capital, in case of 100%foreign owned companies.
7.4. IMMIGRANTS
Bangladesh has sent more than 6.7 million workers to over 140 countries during aperiod of more than
three decades since the mid-1970s. Most of these workers temporarily migrate to work in Middle East
and Southeast Asia. This mass movement of temporary migrant workers has, to some extent, eased
unemployment pressures on the over-burdened labor market in this highly populated country. More
importantly, the remittance transfers received from thesemigrant have reached a phenomenal level of
over 10 billion US dollar in 2009, approximately 12 percent of GDP in Bangladesh. Remittance inflows hit
a decade high of $12.17 billion in the year 2011, offering the government a much-needed cushion
against dwindling foreign exchange reserves and exchange rate volatility. Remittances grew10 percent
in 2011 from the previous year.
The latest growth in remittances comes as more workers are joining the bandwagon of more than 7.6
million Bangladeshi migrants, 80 percent of whom working in the oil-rich Middle East. During 2011, the
outflow of migrant workers surged 45 percent to a two-year high at 568,000 due to opening of new jobs.
Key Middle East countries need more foreign workers now as they are taking more development
projects, inspired by high oil prices at around $100 a barrel.
7.5. CONTRACT WORKERS/TEMPORARY RESIDENTS
Work Permit
Work permit for foreign nationals is required for employment in Bangladesh. Private sector industrial
enterprises (outside EPZ), 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. For expatriate employment the guidelines are as follows:
Nationals of the countries recognized by Bangladesh are considered for employment.
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Employment of expatriate personnel is considered only in industrial establishments and
commercial enterprises duty sanctioned / registered by the appropriate authority.
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.
Decision of the Board of Directors of the concerned company for new employment/ extension
has to be furnished.
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.
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.
For obtaining new Work Permit, the expatriate investors and employee must arrive in
Bangladesh with PI and E types visa respectively obtainable from concerned Bangladesh
Mission in abroad.
Application for Expatriate Work Permit must be submitted to BOI within 15 (fifteen) days from
the date of arrival.
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);
Furthermore, BOI imposes a ceiling of USD 50,000 for investment in joint venture by the Foreign
Shareholders, if that joint venture asks for work permit in favor of its expatriate employees.
Prescribed application form has to be collected from BOI or may be be downloaded from BOI website
www.boibd.org.
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. No prior Bangladesh Bank approval is necessary for such remittances.
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8. OTHER FORMS OF TAXATION
8.1. SALES TAX/VAT
VAT is imposed on goods and services at stages of import stage, manufacturing, supply, and
trading;
VAT is imposed on servicesprovided in Bangladesh and also on the servicesrendered from the
outside Bangladesh;
A uniform VAT rate of 15%is applicable for both goods and services;
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. 60million
and above, except in the cases specified;
Turnover tax at the rate of 3%is leviable where annual turnover is less than Tk. 60 million;
Truncated rate also applied in the cases specified by VAT laws which has been determined on
the basis of assumed percentage of value addition;
Supplementary Duty (SD) is applicable as per 3
rd
Schedule of the VAT Act, 1991;
Exemption of VAT or imposition of VAT @0%is regulated by Section 3 (Export or Deemed
Export), Section 14 (goods/service declared by the government), 1
st
and 2
nd
Schedule of the VAT
Act, 1991.
8.2. STAMP DUTY
Stamp dutyis one of the main source of Government revenue collection. All matters relating to stamps
are regulated through The Stamp Act. 1899 and Stamp Manual, 1931.
Stamp dutiesare applicable on the following:
Agreements & contracts
Notes
Certified copies
Documents
Land registration, etc.
8.3. PROPERTY TAXES
A property tax is somewhat similar to a wealth tax. Only a certain portion of an individuals tangible
wealth is taxed at a certain rate, which is often a flat rate, but may vary under different circumstances or
jurisdictions. The tax base may include, but is not limited to, a variety of assets such as real estate, land,
family home, investment property, and private firms and forests lands.
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8.4. PAYROLL TAX
In general, salary means monthly amount paid to a person for doing an ongoing long term job and
typically in a permanent capacity. However, according to section 2 (58), "salary" includes:
(a) any wages;
(b) any annuity, pension or gratuity;
(c) any fees, commissions, allowances, perquisites or profits in lieu of, or in addition to, salary or
wages;
(d) any advance of salary;
(e) any leave encashment;
According to Section 21(1) of the Income Tax Ordinance (ITO), the following income of an assessee shall
be classified and computed under the head "Salaries", namely:-
(a) any salary due from an employer to the assessee in the income year, whether paid or not;
(b) any salary paid or allowed to him in the income year, by or on behalf of an employer though not
due or before it became due to him; and
(c) any arrears of salary paid or allowed to him in the income year by or on behalf of an employer, if
not charged to income-tax for any earlier income year.
For the purpose of computing the income chargeable under the head "salary", the value if perquisites,
allowances and benefits includable in the said income shall be determined in accordance with the
provision of the rule 33A to rule 33J, whichever is applicable. 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, the amount, if any by
which the house rent allowance so receivable exceeds fifty percent of the basic salary or taka
15,000 per month, whichever is less, shall be included in his income.
Where the employee is provided with rent free accommodation, the rental value of the
accommodation or twenty five percent of the basic salary of the employee, whichever is less,
shall be included in his income.
Where no conveyance is provided by the employer and the conveyance allowance is receivable
by the employee on cash, the allowance soreceivable in excess of Tk. 24,000/=shall be included
in his income.
Where the conveyance is provided by the employer for the use of the employee partly or
exclusively for personal or private purposes, there shall be included in the employee's income,
an amount equal to seven and half percent of the employee's basic salary.
Where any amount is payable to the employee by way of hospitalisation or medical expenses,
the amount, if any, by which the sum receivable by him exceeds the actual expenditure incurred
by him shall be included in his income.
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8.5. FRINGE BENEFIT TAX
When an employee receives benefits from an employer, the taxable benefits are subject to Individual
Income Tax in Bangladesh.
8.6. TARIFFS
A tariff may be either tax on importsor exportsor a list or schedule of prices. The import of a number of
products is the sole reserve of nominated government trading organizations. 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.
Importers must lodge a 10 per cent -100 per cent (depending on the business relationship with
banker) cash margin against covering letters of credit.
Import transactions are governed by regulations specified on the Bangladesh Import Policy
Order (IPO) issued by the Chief Controller of Imports and Exports, Ministry of Commerce.
Foreign exchange is controlledby the Bangladeshi.
Bank in accordance with Foreign Exchange Control policy:
Allocation is administered through authorised financial institutions.
All imports must be supported by a letter of credit, except for the import of capital machinery
and raw materials for industrial use.
There is a short list of prohibited goods most second-hand goods are included. 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.
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9. LABOR RELATIONS AND SOCIAL SECURITY
The Employment Conditions are regulated by the Labour Act, 2006. The minimum age and conditions
are described in Sections 34 to 44 of the Labour Act, 2006). Child labour is prohibited under Section 34
of the said Act. No child can be employed or allowed to work in any trade or in any establishment. A
child means aperson who is yet to complete fourteen years of age." Contracts are made in the form of a
letter of offer. Workers may also be engaged on verbal agreements. In government organizations and in
some private organizations as well, 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. In the private sector, the dignity of labor is ensured in
accordance with the principles enunciated in the ILO convention and recommendations.
Any manufacturing company employing ten or more workers is required to be registered under the
Labour Act, 2006 with the office of the Chief Inspector of Factories and Establishment. The act is
primarily to regulate working conditions and to ensure safety in the factory.
9.1 LABOR MARKET
The wage in Bangladesh is probably the lowest in south Asia. The productivity of the employees is
satisfactory and apt to change is frequent. The wage in Bangladesh is controlled by the relevant
statutes. The minimum wage in ensured by the constitution. Wages vary from sector to sector as
well as well through profession. A basic characteristic of the Labor market of Bangladesh is a high rate
of labor force growth and low rates of employment. Agriculture is still the major sector providing
employment followed by the service sector. The labor market shows the existence of high
underemployment, dominant rural share and smaller share of women employment.
Bangladesh experienced a modern annual growth rate in labor force (2.7%) until the end of the 1970s.
But over the period of 1981 to 1996, total labor force increased from 25.9 million to 56.0 million
recording an annual average growth rate of 8%. The increase is mostly attributed to adoption of
definitional change in female economic activities in 1989 in Labor Force Survey (LFS).
The garments manufacturing, leather and leather goods, tea, jute and jute goods, fish and frozen food,
NetWare are the important industrial sectors which earn substantial amount of foreign currency each
year from export. Millions of male and female workers are involved with these industries by occupation.
Occupational health and safety is an important workers right. The legal framework of Bangladesh
provides some basic protection to workers in industrial sectors in this issue.
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9.2 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, regarding this as an important aspect of its efforts to safeguard human
rights.
In order to implement the labour regulations in Bangladesh, a minimum-wage system has basically been
established in the whole country.
9.3 THE RIGHT TO WORK -NON NATIONALS
Expatriates working in Bangladesh should have a current work Visa, working permit from the relevant
authority.
9.4LABOUR LAWS / REGULATIONS
Bangladesh offers an abundant supply of disciplined, easily trainable and low-cost work force suitable
for any labour- intensive industry. Furthermore, there is an increasing supply of professionals,
technologists and other middle and low level skilled workers who have received technical training from
universities, colleges, technical training centers and polytechnic institutions. 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.
The Labour Act, 2006 consolidated and amended previous laws relating to employment of workers,
relationship between workers and employers, determination of minimum wages, payment of wages,
compensation for injuries arising out of and in the course of employment, formation of trade unions,
raising and resolving industrial dispute, health, safety, welfare and environment of employment of
workers and apprentice and related issues.
9.5THE SOCIAL PARTNERSHIP WORKER PARTICIPATION
The Labour Act, 2006 contains provisions on compensation for workers injured in the course of
employment, maternity benefit and provident funds for workers of non-Government establishments.
The Act also requires certain industrial undertakings to establish a Workers Participation Fund and a
Workers Welfare Fund.
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10. GRANTS AND INCENTIVES
10.1. 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, 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
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11. QUALITY OF LIFE
11.1. HOUSING
Expatriates living in Dhaka have found it to be an affordable, safe and comfortable place to live in, with a
good range of expatriate housing readily available in centrally located apartments. Popular places to live
in include Gulshan, Baridhara andBanani. Most expatriates live in these areas. A quality apartment rents
for $700-$1,000/month. Luxuryhouses rent from$1,000-$1,500 (luxury units).
In several suburban areas, quiet andsecluded housingare also available for rent. For those visiting
Bangladesh, Dhaka offers several international standard hotels including the Dhaka Sheraton and the
Sonargaon (a Pan-Pacific Hotel). These hotels provide deluxe accommodation, restaurants, health clubs
and entertainment facilities. In addition there area number of medium standard hotels and guest
houses in Dhaka and Chittagong to accommodate the expatriates.
Rental Accommodation
Expatriates in Bangladesh have found it to be an affordable, safe and comfortable place, with acceptable
expatriate housing readily available in centrally located apartments. Many expatriates live in the Dhaka
areas of Gulshan, Baridhara, and Banani. A typical apartment will rent for $800-$1,200/month, houses
for $1,200-$1,500 (luxury units).
Hotels
Dhaka offers several 5 star hotels. 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
11.2. EDUCATION
The three main educational systems in Bangladesh:
* General Education System
* Madrasah Education System
* Technical - Vocational Education System
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Primary Stage:
Five-year compulsory primary education for the 6-10 age group is imparted mainly in government and
non-government primary schools. In metropolitan cities, however, government and non-government
primary schools cater to the educational needs mainly of the poorer sections of the people, as the
better-off families usually send their children to Private English Medium schools/ secondary schools that
run primary sections as well. There, however, exist some NGO-run non-formal schools catering mainly
for the dropouts of the government and non-government primary schools.
Secondary Stage:
On completion of primary education, students (11+) enroll for junior secondary education that spans
over 3 years. At the end of this phase, 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, and the Ministry of Labor and Employment 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.e. humanities, science, commerce, etc. At the end of 10th class,
the students sit for their first public examination called Secondary School Certificate (S.S.C.) examination
under the supervision of seven education boards.
The students of religious education and English medium streams also sit for their respective public
examinations, Dakhil and O level, conducted by the Madrasha Education Board and London/Cambridge
University respectively.
Higher Secondary Stage:
After 10 years of schooling (primary and secondary), students (16+) who succeed in passing the
Secondary School Certificate (S.S.C.)/Dakhil/O Level examination have the option of joining a college for
a 2 year higher secondary education in their respective areas of specialization, or enroll in technical/
poly technical institutes for technical education. After 2-year higher secondary education, one has to sit
for another public examination called Higher Secondary Certificate (H.S.C.) examination conducted by
the education boards.
Students of Religious and English Medium streams also sit for their respective public examinations, Alim
and A' level, conducted by the Madrasha Education Board and London/Cambridge University
respectively.
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. Successful
completionof a degree course is a pre-requisite for appointment to a white-collar civilian job.
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Post-graduate education normally of 1-2 year duration is provided at the universities and selected
degree colleges and institutions.
11.3. COMMUNICATION AND TRANSPORT
The transport sector of Bangladesh consists of a variety of modes. As the country is essentially a flat
plain all three modes of surface transport, i.e. road, railway and water, are widely used in carrying both
passengers and cargo. The airline network isalso extensive and effective.
Road
In Bangladesh, among the various modes of transport, road transport system has been playing a
significant role in transporting passengers and goods.The Roads and Highways Department (RHD)
manage several categories of road. RHD has total length of 20,948 Km road unders its control. RHD also
control a total number of 4,659 bridges and 6,122 culverts. RHD are currently operating about 161 ferry
boats in 81 crossings (13 on national highways, 11 on regional highways and 57 on feeder roads) on its
road network throughout the country. As of January 2010, Local Government Engineering Department
(LGED) has so far constructed a total of 133,514 km (64,691 km dirt road and 68,823 km paved roads)
upazila and union roads and 971,498 bridges/culverts.
The 4.8 km long Bangabandhu Bridge, whichwas opened to traffic in 1998, is the eleventh longest in the
world. It has established a strategic link between the East and the West of Bangladesh. It is generating
multifaceted benefits to thepeople and promoting inter-regional trade. Apart from quick movement of
goods and passenger traffic, it is facilitating transmission of electricity and natural gas and has
integrated the telecommunication links.
Air
The Civil Aviation Authority is a public sector entity entrusted to construct, maintain and supervise
airports and regulate air traffic. The national flag carrier Biman flies to 26 international and eight
domestic destinations.
There are now 13 operational airports and Short Take-off and Landing (STOL) ports in Bangladesh. These
are Dhaka, Barisal, Chittagong, Comilla, Cox's Bazar, Ishurdi, Jessore, Rajshahi, Syedpur, Sylhet and
Thakurgaon. Of these, the airports at Dhaka, Chittagong and Sylhet serve international routes. Air cargo
and STOL services have been handed over to the private sector by the government.
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Rail
About 32%of the total area of Bangladesh is effectively covered by railways. Bangladesh Railway had a
total network of 2,835.04 km (Broad Gauge 659.33 km, Dual Gauge 374.83 km and Meter Gauge-
1,800.88 km) and a total of 440 stations at the end of the year 2008-2009. Train services between
Dhaka-Kolkata have been commenced on 14 April 2008 in order to establish communication between
Bangladesh and India. After inclusion of railway track over the Jamuna Bridge, railway link between east
and west zone has been established.
Waterways
Country made crafts are the most widely used carriers on the rivers. These carry passengers and
merchandise on a large scale. The landscape of Bangladesh is dominated by about 250 major rivers
which flow essentially north-south. The alluvial flood plain formed by these rivers covers most of the
country. Wherever there is a river and a village, a launch or steamer will play for trade.
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.
The entire coast along the Bay of Bengal is 710 km long. There are two major ports in the country.
Chittagong, the oldest port, has been an entry-port for at least 1,000 years. The Mongla port in Khulna
region serves the western part of Bangladesh.
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APPENDICES
A. RATES OF TAX INDIVIDUAL/SOLE PROPRIETORSHIP/FIRM
Rates of Income Tax for the Assessment Year 2011-2012
F
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r

I
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d
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/
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P
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/
P
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p
Total Income Rate
First Tk. 180,000For Male;
First Tk. 200,000For Female;
First Tk. 200,000For Individuals aged 65+years;
First Tk. 250,000For Disabled Individuals.
Nil
Next Tk. 300,000 10%
Next Tk. 400,000 15%
Next Tk. 300,000 20%
Balance Income 25%
Minimum Tax Liability Tk. 2,000
Non-resident Individuals 25%
Surcharge 10% of Applicable
Tax
If Total Net Worth
exceeds Tk. 2 crore
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B. 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, out
of which maximum 5%could be Pre IPO
Placement)
Private Limited Companies including Non-
publicly traded companies (except Bank,
Insurance & Financial Institutions)
37.50%
PubliclyTraded Companies (except Bank,
Insurance & Financial Institutions)
If Dividend <20%but >10%, Tax Rate
27.50%
If Dividend >20%, Tax Rebate 10%
If Dividend <10%, Tax Rate 37.5%
If declared Dividend not paid within the
time specified by SEC, Tax Rate 37.5%
Bank, Insurance & Financial Institutions 42.50%
Cigarette Manufacturing Company 42.50%
Dividend Income 20%
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C. Registrar of Joint Stock of Companies and Firms (RJSC)FEES
To apply for Name Clearance, Registration, Certified Copiesand to submit returns, fees and stamps are
to be provided as under:
Fees of Name Clearance
i. For NC clearance: @ BDT 600.00 for each of the proposed names.
ii. For time extension: @ BDT 100.00 for each time extension application.
Stamps and Fees of Registration
PRIVATE COMPANY (Companies Act, 1994)
Stamps
i. For affixing on the Memorandum of Association: BDT 500.00
ii. for affixing on the Articles of Association:
For Authorized Capital Stamp (BDT)
Up to 10,00,000.00 2,000.00
>10,00,000.00 up to 3,00,00,000.00 4,000.00
>3,00,00,000.00 10,000.00
Registration fee
i. For filing 6 documents (5 filled in forms plus 1 memorandum & articles of association, @ BDT
200.00 per document): BDT 1,200.00
ii. For the authorized share capital:
Authorized Capital (BDT) Fee (BDT)
Up to 20,000.00 360.00
Additional for every 10,000.00 or part after first 20,000.00 up to
50,000.00
180.00
Additional for every 10,000.00 or part after first 50,000.00 up to
10,00,000.00
45.00
Additional for every 10,000.00 or part after first 10,00,000.00 up to
50,00,000.00
24.00
Additional for every 1,00,000.00 or part after first 50,00,000.00 45.00
PUBLIC COMPANY (Companies Act, 1994)
Stamps
i. For affixing on the Memorandum of Association: BDT 500.00
ii. For affixing on the Articles of Association:
For Authorized Capital (BDT) Stamp (BDT)
Up to 10,00,000.00 2,000.00
>10,00,000.00 up to 3,00,00,000.00 4,000.00
>3,00,00,000.00 10,000.00
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Registration fee
i. For filing 8 or 9 documents (7 or 8 filled in forms plus 1 memorandum & articles of association,
@ BDT 200.00 per document): BDT 1,600.00 or 1,800.00
ii. For the authorized share capital:
Authorized Capital (BDT) Fee (BDT)
Up to 20,000.00 360.00
Additional for every 10,000.00 or part after first 20,000.00 up to
50,000.00
180.00
Additional for every 10,000.00 or part after first 50,000.00 up to
10,00,000.00
45.00
Additional for every 10,000.00 or part after first 10,00,000.00 up to
50,00,000.00
24.00
Additional for every 1,00,000.00 or part after first 50,00,000.00 45.00
FOREIGN COMPANY (Companies Act, 1994)
i. For filing 6 document (1 memorandum and articles of association @ BDT 200.00 and 5 other
documents @ BDT 200.00 per document): BDT 1,200.00
TRADE ORGANIZATION (Companies Act, 1994)
Stamps
i. For affixing on the Articles of Association: BDT 1,500.00
Registration fee
i. for filing 6 documents (5 filled in forms @ BDT 200.00 per document plus 1 memorandum &
articles of association, @ BDT 200.00): BDT 1,200.00
ii. For the number of members of association:
For up to 20: BDT 600.00
For >20 up to 100: BDT 1,500.00
For every 100 or part above the first 100 (limited member) BDT 150.00
For unlimited members BDT 4,500.00
SOCIETY (Societies Registration Act, 1860
i. Registration Fee: BDT. 250.00
ii. Registration Filing Fee: BDT. 0.00
PARTNERSHIP FIRM (Partnership Act, 1932)
i. Registration fee: BDT. 110.00
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Fees of Returns Filing
COMPANIES (Private & Public)
a. Returns Filing
i. For filing any document within the schedule time: @ BDT 200.00 per document
ii. Late fee for filing any document beyond the schedule time: @ BDT 2.00 per day not
exceeding BDT 1,000.00 per document.
b. Registration of Mortgage, Debentures and Charges
Secured Amount (BDT) Fee (BDT)
upto 5,00,000.00 150.00
Additional for every 5,00,000.00 or part after the first 5,00,000.00 upto
50,00,000.00
120.00
Additional for every 5,00,000.00 or part after the first 50,00,000.00 60.00
FOREIGN COMPANY
a. Returns Filing
i. For filing any document within the schedule time: @ BDT 200.00 per document
ii. Late fee for filing any document beyond the schedule time: @ BDT 2.00 per day not
exceeding BDT 1,000.00 per document.
b. Registration of Mortgage, Debentures and Charges
Secured Amount (BDT) Fee (BDT)
upto 5,00,000.00 150.00
Additional for every 5,00,000.00 or part after the first 5,00,000.00 upto
50,00,000.00
120.00
Additional for every 5,00,000.00 or part after the first 50,00,000.00 60.00
TRADE ORGANIZATION
a. Returns Filing
i. For filing any document within the schedule time: @ BDT 200.00 per document
ii. Late fee for filing any document beyond the schedule time: @ BDT 2.00 per day not
exceeding BDT 1,000.00 per document
b. Registration of Mortgage, Debentures and Charges
Secured Amount (BDT) Fee (BDT)
upto 5,00,000.00 200.00
Additional for every 5,00,000.00 or part after the first 5,00,000.00 upto
50,00,000.00
120.00
Additional for every 5,00,000.00 or part after the first 50,00,000.00 60.00
SOCIETIES
i. For filing any document: @ BDT 200.00 per document
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PARTNERSHIP FIRM
i. For filing Form -2, 5 or 6: BDT 4.00 each.
Stamps and Fees of Issuance of Certified Copies
Private Company, Public Company, Trade Organization and Foreign Company
a. Non-judicial stamp
i. For Memorandum of Association or part thereof: BDT 20.00
ii. For Articles of Association or part thereof: BDT 20.00
iii. For each of other document : BDT 20.00
b. Court fee (stamp) - per application per company: BDT 20.00
c. Fees
i. For inspection of records: BDT 100.00
ii. For copy of certificate of incorporation: BDT 100.00
iii. For copy of certificate of commencement of business: BDT 100.00
iv. Copying of documents for each 100 words or part: @ BDT 5.00 subject to a minimum of
BDT 100.00
v. Comparison of document each 100 words or part: @ BDT 5.00 subject to a minimum of BDT
100.00 of each document
Society
a. Identified by the applicable year
For Inspection of documents: BDT 1.50
For copy of Annual list of Managing Body: BDT 20.00
b. Identified by the effective date
For copy of Address : BDT 20.00
For copy of Alteration of Name: BDT 20.00
For copy: BDT 0.50 for each 100 words or part thereof
Partnership firm
a. Identified by the effective date
i. For Inspection of documents: BDT 1.50
ii. For copy: BDT 0.50 for each 100 words or part thereof
Fees of Winding Up
i. For Private and Public Company: BDT 20.00
ii. For Trade Organization and Foreign Company: BDT 10.00