Are You Thinking Of Business Setup In Bangladesh! Set Up Branch Or liaison Office Too?

Setting Up Branch or Liaison Office, business setup

How Can You Setup Your Business In Bangladesh? In Few Steps

Many foreign companies do not want to business setup a subsidiary in Bangladesh. These businesses can establish a liaison office or a branch office.

What Are The Process For Business Setup?

The liaison office is unable to conduct business setup in Bangladesh and create profit. A branch office, on the other hand, can only perform limited business. A liaison office or branch office must additionally seek a trade license, an ETIN, and VAT registration after receiving approval from BIDA (for branch office). 

Bangladesh law requires that the permitted Office pay duty, income tax, VAT, revenues, and other taxes to the government. The VAT rate is 15%, and the income tax rate is 32.5 %. Duty is calculated based on the assessable value of the imported goods.

What Is a Liaison Office and What Does It Do?

A Liaison Office [also known as a representative office] can only carry out liaison activities, that is, it can operate as a communication conduit between the Head Office and parties in Bangladesh. It is illegal to engage in any type of business set up in Bangladesh, and it is also illegal to earn money there.

What Is a Branch Office and How Does It Work?

A foreign entity’s country office is referred to as a branch office. Usually, a branch office is not allowed to engage in any business setup activities in Bangladesh and cannot earn any money there. However, there are possibilities to broaden the scope of the branch office, such as allowing the branch office to participate in commercial activities with BIDA’s prior approval.

What Are The Formalities of Registration And Statutory Requirements?

Registration with the Bangladesh Investment Development Authority is a bit budgeting.

Investment funds must be repatriated within two months after obtaining a BIDA Trade License from the local city corporation and registering for income tax and VAT with the National Board of Revenue.

The Required Documents Include:

1. Completed, signed, and stamped prescribed Application Form

2. Details of operations to be done in Bangladesh.

3. Information about the company’s shareholders, promoters, and directors.

4. The Principal Company’s MOA and AOA, as well as the Certificate of Incorporation.

5. Last financial year’s audited accounts.

6. Board resolution to open a Bangladesh branch/liaison/representative office.

7. The office’s proposed organogram

The planned office must apply online first, then submit the necessary documentation to BIDA. All documentation must be provided to BIDA in four copies.

Important: The documents in items 4-6 must be attested by the Bangladesh Embassy, the Bangladesh High Commission, or the Bangladesh Chamber of Commerce in the country of origin

Important: The documents in items 4-6 must be attested by the Bangladesh Embassy, the Bangladesh High Commission, or the Bangladesh Chamber of Commerce in the country of origin

Focus Point: 

1. The BIDA registration process takes 3-4 weeks from the moment it is submitted. 

2. Permission to operate is usually granted for three years, after which it is renewable for another three years.

3. For registration with BIDA, the government charges around USD 300. Local government fees for acquiring a Trade License are an additional USD 100.

5 Reasons Why Bangladesh is a Great Destination for Business Setup

Low Labor Costs: Bangladesh has a vast pool of low-cost labor, which is ideal for labor-intensive industries like garments and textiles. This makes it easier for businesses to keep their operational costs low and maximize their profits.

Strategic Location: Bangladesh is strategically located between South and Southeast Asia, giving businesses access to a large consumer base. The country is also well-connected by air, sea, and land routes, making it easier to transport goods.

Favorable Business Environment: The Bangladesh government has taken several initiatives to improve the business environment, such as reducing bureaucratic hurdles, streamlining regulatory processes, and providing investment incentives to investors. This makes it easier for businesses to start and operate in the country.

Large Market Potential: Bangladesh has a population of over 160 million people, providing businesses with access to a large consumer market. The country’s middle class is growing, which means that businesses can tap into a growing market and benefit from the country’s economic growth.

Investment Incentives: The Bangladesh government offers several investment incentives to attract foreign investors, including tax holidays, duty-free import of capital machinery, and repatriation of profits and capital. These incentives make it easier for businesses to invest in the country and maximize their profits.

The Minimum Capital Requirement

To open a liaison office in Bangladesh, foreign companies or sponsors must deposit USD 50,000 into the designated account of the branch office or liaison office in Bangladesh within two months of receiving approval from BIDA.

Importing and Exporting

It’s not allowed. However, Branch Offices may get an Import and Export Registration Certificate and operate in import and export with the consent of BIDA

Bringing It All Together

Liaison or Branch offices can be established by foreign investors who wish to carry out limited monitoring, supervision, and marketing activities in Bangladesh without having to register as a limited company under Bangladeshi law. This allows investors to engage in limited activities and, as a result, they are unable to produce revenue in Bangladesh.