A liaison office in Bangladesh cannot earn local revenue. Everything it does, every expense it pays, is funded by the foreign parent company via inward remittance. That single fact shapes every compliance obligation the office carries.
But “no revenue” doesn’t mean “no compliance.” BIDA reporting, TDS deductions, VAT records, and a statutory audit are all mandatory. Miss them and BIDA can suspend or revoke the office’s approval.
This article covers every compliance obligation, organised by frequency, with a consolidated calendar at the end. If you’re still in the setup phase, read our guide on liaison office setup in Bangladesh first.
Liaison office vs branch office: key compliance differences
The liaison office and the branch office look similar from the outside but carry different compliance profiles. Here’s how they compare at a glance:
| Compliance area | Liaison office | Branch office |
| Earn local revenue? | No | Yes (BIDA-approved activities) |
| Pay profit/corporate income tax? | No | Yes |
| BIDA approval required? | Yes | Yes |
| RJSC registration required? | No | Yes |
| Statutory audit required? | Yes (for BIDA) | Yes (for RJSC + BIDA) |
| TDS on payments? | Yes | Yes |
| VAT on outgoing supplies? | No | Yes (if applicable) |
| Issue Mushak 6.3 tax invoices? | No | Yes |
| Quarterly BIDA report? | Yes | Yes |
| USD 50,000 minimum remittance? | Yes | Yes |
For the full branch office checklist, see our article on branch office compliance in Bangladesh.
What a liaison office must comply with
A liaison office is not a separate legal entity in Bangladesh. It’s a representative presence of the foreign parent. The parent company is directly accountable for all tax obligations, regulatory filings, and compliance failures.
Compliance obligations fall into 4 categories:
• BIDA reporting (quarterly, annual, renewals)
• Income tax (monthly TDS, half-yearly return, annual return)
• VAT (monthly return, VDS on supplier payments)
• Statutory audit and licence renewals
What a liaison office can and cannot do in Bangladesh
BIDA defines the permitted activities of each liaison office in its approval letter. Generally, a liaison office can:
• Represent the foreign parent company in Bangladesh
• Conduct market research and feasibility studies
• Promote the parent’s products and services (without selling them locally)
• Facilitate import and export activities for the parent company
• Coordinate financial and technical collaboration between the parent and Bangladesh parties
• Supervise local agents and manage customer care
A liaison office cannot issue invoices, receive payment, sign commercial contracts, or generate any local revenue. If your Bangladesh operations are generating income, you need a branch office or subsidiary — not a liaison office. Operating a liaison office while earning local revenue is a BIDA violation and grounds for licence revocation.
BIDA compliance obligations
BIDA (Bangladesh Investment Development Authority) approves and regulates all liaison offices. The approval letter specifies permitted activities, the geographic scope, and the term of operation. Every material operational decision requires BIDA’s involvement.
Quarterly receipts and payments report
File a quarterly receipts-and-payments report to BIDA covering all foreign remittances received and operational expenditure incurred. Deadline: within 30 days of each quarter end. This report also goes to Bangladesh Bank and NBR.
Annual report with audited financials
Submit an annual report to BIDA each year. This must include audited financial statements from an FRC-enlisted auditor. The annual report is the primary accountability document the liaison office files with BIDA each year.
BIDA approval renewal
BIDA approval is granted for a fixed term (typically 2 years). Apply for renewal at least 2 months before the current approval expires. Operating with an expired BIDA approval is illegal, with no grace period.
Work permits for foreign nationals
Every foreign national employed in the liaison office requires an individual BIDA work permit, renewed annually. Ministry of Home Affairs security clearance is required for each permit and takes up to 45 days from the BIDA approval letter date.
Foreign nationals must hold a certificate of income tax exemption or clearance from NBR at all times.
Address changes and multiple offices
Notify BIDA in writing before changing your registered address. BIDA approval is required before the change takes effect. Each additional office location in Bangladesh requires a separate BIDA authorisation.
Income tax compliance (Income Tax Act 2023)
A liaison office pays no profit tax — it has no revenue and therefore no taxable income. But TDS (Tax Deducted at Source) obligations apply in full. Every payment the liaison office makes to employees, landlords, suppliers, or service providers triggers a TDS deduction.
TDS (Tax Deducted at Source) — monthly
Deduct TDS at the applicable rate on every payment. This includes:
• Salaries paid to employees
• Office rent
• Supplier invoices for goods and services
• Contract labour fees
• Professional service fees
Each month, in order:
1. Deduct TDS at the applicable rate when payment is made or becomes payable
2. Deposit the withheld TDS to the government treasury account
3. Issue a TDS certificate to the payee
4. File the salary TDS statement under Rule 21
5. File the supplier TDS statement under Rule 18
The liaison office must hold a valid TIN (Taxpayer Identification Number) from NBR before these obligations begin.
Half-yearly TDS return
File a consolidated withholding tax return under Section 75A every 6 months:
• 31 January (covering July to December)
• 31 July (covering January to June)
Annual income tax return and TDS filings
Three annual filings are required:
• Annual income tax return under Section 75 (nil return reflecting zero taxable income) — deadline: 30 November
• Annual return of salary TDS statements under Section 108
• Employee annual tax return submission details under Section 108A
See our tax services in Bangladesh for what we handle on your behalf.
VAT compliance (VAT and SD Act 2012)
A liaison office makes no taxable supplies, so it does not charge output VAT or issue Mushak 6.3 tax invoices. But VAT obligations still exist on the input side — specifically through VDS (VAT Deducted at Source) deducted from supplier payments.
VDS (VAT Deducted at Source) — monthly
When making payments to VAT-registered suppliers, deduct VAT at the applicable rate. Then:
• Deposit the VDS amount to the government treasury
• Issue a Mushak 6.6 VDS certificate to the supplier
Monthly VAT return (Mushak 9.1)
File Mushak 9.1 monthly to report VDS amounts deducted and deposited. Deadline: by the 15th of the following month. Even if the VDS amount is zero for a given month, maintain the records.
VAT records
Maintain purchase records and VAT registers at all times. The VAT authority can request inspection. Liaison offices are not required to maintain sales records (since there are no sales).
Annual VAT clearance certificate
Obtain an annual VAT clearance certificate. This is required for your BIDA annual report submission and licence renewals.
Statutory audit and annual reporting
A liaison office requires a statutory audit annually under the Companies Act 1994. The audit is mandatory for BIDA annual report submission. Without audited financials, BIDA will not accept the annual report.
Since 2023, auditors must be registered with the FRC (Financial Reporting Council) of Bangladesh. An audit conducted by a non-FRC firm is not valid for BIDA purposes.
The audit from your parent company’s home-country auditor does not satisfy Bangladesh’s statutory audit requirement. A separate Bangladesh audit by an FRC-enlisted chartered accountant is always required.
Our audit and assurance services cover statutory audits for liaison offices with FRC-enlisted partners. The audit covers receipts from parent remittances and all operational expenditure — no revenue to audit, but the expense side must be fully documented.
Bangladesh Bank obligations
Within 2 months of receiving BIDA approval, remit at least USD 50,000 from the parent company into Bangladesh. This covers setup costs and 6 months of operational expenses.
Open a dedicated bank account at a scheduled bank in Bangladesh. All foreign remittances must flow through this account, in compliance with Bangladesh Bank’s Guidelines for Foreign Exchange Transactions.
Submit quarterly reports to Bangladesh Bank covering all foreign remittances received and operational expenditure drawn from those remittances. This is the same quarterly report submitted to BIDA and NBR.
Remittances from the parent company are the sole source of funds for a liaison office. Local fund-raising of any kind — including loans from third parties in Bangladesh — is not permitted. Any outward remittance from Bangladesh (other than unused parent funds) is also prohibited.
Licence and registration renewals
These renewals recur every year unless stated otherwise:
• Trade licence (city corporation or municipality): annually
• Trade body membership (if applicable): annually
• BIDA approval: before expiry (typically every 2 years)
• Work permits for each foreign national: annually
• Certificate of income tax exemption or clearance for foreign nationals: annually
For a full list of annual deadlines across all entity types, see our Bangladesh Annual Compliance Calendar.
Consolidated compliance calendar
Use this table to map every liaison office obligation to its frequency.
| Monthly | Quarterly | Half-Yearly | Annual |
| Deduct TDS on all payments (salaries, rent, suppliers, services) | Submit quarterly receipts-and-payments report to BIDA (within 30 days of quarter end) | File half-yearly TDS/withholding tax return under Section 75A | Statutory audit by FRC-enlisted auditor |
| Deposit TDS withheld to government treasury | Submit quarterly remittance report to Bangladesh Bank | Deadline: 31 January (Jul-Dec) | 31 July (Jan-Jun) | Submit annual activity report to BIDA with audited financials |
| Issue TDS certificates to payees | Submit quarterly report to NBR (Tax Authority) | File annual income tax return under Section 75 (nil return if no revenue) | |
| File salary TDS statement (Rule 21) | File annual salary TDS return under Section 108 | ||
| File supplier TDS statement (Rule 18) | Submit employee tax details under Section 108A | ||
| Deduct VDS from supplier payments; deposit to treasury | Obtain annual VAT clearance certificate | ||
| Issue Mushak 6.6 VDS certificate to suppliers | Renew trade licence | ||
| File monthly VAT return (Mushak 9.1) covering VDS amounts | Renew BIDA approval (at least 2 months before expiry) | ||
| Maintain VAT and purchase records | Renew work permits for each foreign national | ||
| Renew trade body membership (if applicable) |
5 common mistakes liaison offices make
1. Earning local revenue without upgrading the structure
The most serious and most common error. If the Bangladesh operation starts generating income, the liaison office structure is immediately non-compliant. BIDA can revoke approval and back-tax the parent company. Convert to a branch office or subsidiary before any commercial activity begins.
2. Missing quarterly BIDA reports
The quarterly receipts-and-payments report to BIDA is due within 30 days of each quarter end. Many offices file the annual report but treat the quarterly reports as optional. They’re not. BIDA can suspend approval for persistent non-compliance.
3. Not deducting TDS on rent and supplier invoices
TDS applies to every payment the liaison office makes — not just salaries. Rent, professional fees, and supplier invoices all attract TDS. Each missed deduction is a separate penalty risk under the Income Tax Act 2023.
4. Using a non-FRC auditor
Since 2023, statutory auditors must be on the FRC panel. An audit from a non-FRC firm is rejected by BIDA for the annual report submission. Confirm your auditor’s FRC registration before engagement each year.
5. Letting BIDA approval lapse before renewal
BIDA renewal must be filed at least 2 months before the approval expires. There is no grace period for operating with an expired licence. Build the renewal filing into your compliance calendar 3 months in advance to allow for any document preparation delays.
Need help managing liaison office compliance?
We manage the full compliance load for liaison offices under the KAC Corporate Compliance Architecture: BIDA quarterly and annual reports, TDS deductions, monthly VAT returns, statutory audit, and Bangladesh Bank quarterly reporting.
Contact us directly and we’ll map your specific obligations.
Frequently asked questions
Does a liaison office pay income tax in Bangladesh?
A liaison office has no local revenue, so there is no profit tax. But TDS applies on all payments — salaries, rent, suppliers, and service fees. Half-yearly TDS returns under Section 75A and an annual nil return under Section 75 of the Income Tax Act 2023 must still be filed.
Does a liaison office need a statutory audit in Bangladesh?
Yes. Even though a liaison office earns no revenue, a statutory audit is required annually. The audited financials are needed for the BIDA annual report submission. The auditor must be registered with the FRC (Financial Reporting Council) of Bangladesh since 2023.
What happens if a liaison office generates local revenue in Bangladesh?
Generating local revenue violates the BIDA approval terms. BIDA can revoke the liaison office licence and NBR may assess back taxes. If your operations are generating revenue, convert to a branch office or incorporate a subsidiary before BIDA raises a query.
How often does a liaison office submit reports to BIDA?
Quarterly receipts-and-payments reports to BIDA within 30 days of each quarter end, plus a separate annual report with audited financials. Work permit renewals and BIDA approval renewals are submitted as they fall due. The quarterly report also goes to Bangladesh Bank and NBR.
What is the minimum remittance required to open a liaison office in Bangladesh?
USD 50,000 must be remitted from the parent company within 2 months of BIDA approval. This covers setup costs and 6 months of operations. All remittances must flow through a dedicated account at a scheduled bank in Bangladesh and be reported quarterly to Bangladesh Bank.
