Guides for foreign investors in Bangladesh
Entering Bangladesh as a foreign company means working across multiple government bodies, each with its own approval process, document requirements, and timelines. Before you can hire staff, open a bank account, or invoice a client, you need the right legal structure, the right registrations, and a clear picture of what compliance looks like every year after that.
This page maps out the full process: legal structures, registration, tax and VAT obligations, employment law, audit requirements, accounting, and what you should expect year after year once you’re operational. Khan Akber & Co. (KAC) is a licensed chartered accountancy firm in Dhaka, registered with ICAB (Institute of Chartered Accountants of Bangladesh). We’ve handled company registrations, BIDA approvals, audit engagements, tax filings, and payroll setups for foreign investors from over 30 countries since 2011.
Your 4 legal structure options in Bangladesh
The first decision every foreign company must make is how it will be legally present in Bangladesh. There are 4 options. Each one has a different legal status, a different approval body, a different commercial scope, and a different level of liability for the foreign parent.
Private limited company
A private limited company (Ltd.) is incorporated at RJSC (Registrar of Joint Stock Companies and Firms) under the Companies Act 1994. It’s a separate legal entity, completely independent from its founders or any foreign parent. It can earn revenue in Bangladesh, sign contracts, hold assets, open bank accounts, and hire both local and foreign staff. Foreign investors can own 100% of the shares in most sectors. This is the most commonly chosen structure for foreign companies that want full commercial operations and long-term presence in Bangladesh.
The company needs at least 2 directors and 2 shareholders. Both can be foreign nationals. The minimum paid-up capital for a foreign-invested private limited company is USD 50,000. This capital is deposited into the company’s Bangladesh bank account after incorporation and can be used for business operations. It’s not a government fee. After RJSC registration, the company also needs a trade license from the relevant city corporation, a TIN (taxpayer identification number) from the NBR (National Board of Revenue), VAT registration if the business makes taxable supplies, and a bank account at a scheduled commercial bank in Bangladesh. Total setup time is typically 4-6 weeks from name clearance to a fully active bank account.
Wholly owned subsidiary
A wholly owned subsidiary is a private limited company where the foreign parent company is the sole shareholder, holding 100% of the shares. The process and requirements are exactly the same as a standard private limited company at RJSC. What makes a subsidiary distinct is legal separation: the subsidiary is an entirely separate legal entity from the parent. The parent company’s liability does not extend to the subsidiary’s debts, contracts, or legal obligations in Bangladesh. Creditors can only pursue the subsidiary’s own assets.
This separation is the defining reason most multinational companies choose a subsidiary structure over a branch office when entering Bangladesh for full commercial operations. The subsidiary can earn revenue, hire staff, sign contracts, and operate exactly like any other private limited company. The parent company remains protected. Post-registration steps are the same: trade license, TIN, VAT registration if applicable, and a bank account.
Branch office
A branch office is not a separate legal entity. It’s a direct extension of the foreign parent company operating in Bangladesh. The parent company remains fully and directly liable for everything the branch does here: its contracts, debts, and legal obligations. BIDA (Bangladesh Investment Development Authority) must approve a branch office before it can legally operate in Bangladesh. Without BIDA permission, the branch has no legal standing.
A branch office can earn revenue from clients outside Bangladesh, remitted in foreign currency. It can also earn revenue locally if its BIDA approval specifically covers local commercial activities. A branch office can hire both local and foreign staff and can open a bank account in Bangladesh. After BIDA approval (which takes 6-10 weeks), the branch must also register at RJSC, get a trade license, a TIN, and a bank account. Plan for 10-14 weeks total from submitting the BIDA application to a fully operational branch with banking access.
Liaison office
A liaison office is the most restricted structure available to foreign companies in Bangladesh. It exists only for non-commercial activities: market research, coordinating with local partners, gathering information, and attending industry meetings. A liaison office cannot earn any revenue in Bangladesh, cannot bill local clients, and cannot sign commercial contracts. Every operating cost must be funded by remittances from the parent company abroad.
BIDA approval is required for a liaison office, through the same process as a branch office. After approval, the liaison office registers at RJSC, gets a trade license, a TIN, and opens a bank account for expense payments. It files annual accounts with BIDA confirming zero local revenue. BIDA approval is valid for 3 years and renewable. A liaison office is the right structure for foreign companies that need a small local presence for research or relationship management before committing to full market entry.
For a detailed comparison of all 4 structures and a clear recommendation on which one fits your specific situation, read: Types of company registration in Bangladesh: a complete guide.
The two registration processes in Bangladesh
How your company registers depends entirely on the structure you choose. There are 2 separate registration processes in Bangladesh, and they run through different government bodies.
RJSC registration: for private limited companies and subsidiaries
RJSC (Registrar of Joint Stock Companies and Firms) handles all private limited company and subsidiary incorporations. The process starts with name clearance on the RJSC online portal (roc.gov.bd). Once the name is approved, you prepare the core documents: the Memorandum of Association (MOA) and Articles of Association (AOA), which define the company’s purpose, share structure, and governance. Supporting forms include director consent forms, a list of directors, and declarations required under the Companies Act 1994. Every document must match RJSC’s required format exactly. A formatting mismatch causes rejection, which resets the timeline by 2-3 weeks.
After submission with the applicable stamp duty and registration fees, RJSC issues the certificate of incorporation. This is the moment the company legally exists in Bangladesh. After incorporation: trade license from Dhaka North City Corporation (DNCC) or Dhaka South City Corporation (DSCC) depending on your office location, TIN from the NBR e-TIN portal, VAT registration (BIN) if your turnover qualifies, and a bank account at a scheduled bank. Banks in Bangladesh have their own KYC processes and typically take 1-2 additional weeks.
BIDA approval: for branch offices and liaison offices
BIDA (Bangladesh Investment Development Authority) handles all branch office and liaison office applications through its One Stop Service (OSS) portal at bidaoss.gov.bd. The application requires: the parent company’s certificate of incorporation from its home country, audited financial statements for the last 2 years, a board resolution authorising the establishment of the Bangladesh office, a power of attorney naming the local authorised representative, and a written description of the proposed activities in Bangladesh.
BIDA reviews the application and may ask for clarifications. Approval typically takes 6-10 weeks. The approval letter specifies the permitted activities (what the branch or liaison can and can’t do), the number of foreign employees authorised, and the approval term, which is 3 years and renewable. After BIDA approval, you still go through RJSC registration for the branch or liaison office entity, get a trade license, TIN, and open a bank account. The post-BIDA steps take an additional 3-4 weeks.
If you’re deciding between a branch office and a liaison office, the key question is whether you need to earn revenue in Bangladesh. For a direct comparison and recommendation: Branch office vs liaison office in Bangladesh: which one should you choose.
Tax and VAT obligations in Bangladesh
Once your company is registered, it enters Bangladesh’s tax system immediately. There are 3 main tax obligations that apply to most foreign-invested companies.
Corporate income tax
All companies registered in Bangladesh must file an annual corporate income tax return with the NBR (National Board of Revenue). The applicable corporate tax rate depends on your company type and sector. Listed companies pay a lower rate than non-listed companies. Publicly traded companies in specific sectors pay reduced rates. The standard deadline for filing is 15 January of the following tax year for companies on a July-June financial year. Advance tax instalments apply during the year for profitable companies: 25% of estimated annual tax is payable in each of 4 quarterly instalments. Missing instalments attracts interest.
VAT (Value Added Tax)
If your company makes taxable supplies of goods or services in Bangladesh, VAT registration with NBR is mandatory once annual turnover crosses the applicable threshold. Registration is done through the NBR VAT online portal at nbr.gov.bd, where you receive a BIN (Business Identification Number). The standard VAT rate in Bangladesh is 15%. Some supplies attract a reduced rate or are exempt, depending on the business category. VAT-registered companies file a monthly return (Mushak 9.1) by the 15th of the following month. The return reports output VAT charged to clients, input VAT paid on purchases, and the net amount payable to NBR. Late or missed returns attract penalties, and consistent non-compliance triggers an NBR audit.
TDS on salaries
All employers in Bangladesh must deduct income tax at source (TDS) from employee salaries above the tax-exempt threshold. The rate depends on the employee’s total annual income and applicable tax slabs under the Bangladesh Income Tax Act. The deducted amount must be deposited with NBR by the 15th of the following month. At the end of the tax year, the employer submits a statement of all TDS deductions to NBR. Employees use this statement to file their individual income tax returns. Getting TDS calculations wrong is one of the most common compliance errors in the first year of operations for foreign companies.
Employment and payroll compliance in Bangladesh
Foreign companies employing staff in Bangladesh must comply with the Bangladesh Labour Act 2006. This law sets the legal floor for every employment relationship in Bangladesh: contracts, working hours, leave entitlements, notice periods, severance pay, and termination procedures. These minimums apply to all employees regardless of what an employment contract says. A contract can offer more. It cannot offer less.
Salary structure and payroll
Salary structure matters more in Bangladesh than in many other countries because specific allowances are tax-exempt under Bangladesh tax law. House rent allowance, medical allowance, and transport allowance are partly or fully exempt from income tax up to specified limits. A foreign employer who structures salaries correctly reduces the employee’s tax burden without reducing their take-home pay. The difference between a structured and an unstructured salary package at the same gross salary can be significant for mid-to-senior-level staff.
Companies with 100 or more employees must maintain a provident fund under the Bangladesh Labour Act 2006. Both employer and employee contribute 10% of basic salary. Companies below 100 employees may set up a voluntary provident fund. Provident fund deductions are recorded monthly and must be held separately from operating funds.
Work permits for foreign nationals
Any foreign national working in Bangladesh in exchange for compensation needs a valid BIDA work permit. This applies to salaried employees, directors receiving remuneration, and technical staff providing services from a Bangladesh office. Applications go through the BIDA OSS portal. Required documents include a valid passport, academic certificates relevant to the declared role, proof of professional experience, an employment letter from the Bangladesh company, a No Objection Certificate (NOC) from the relevant sector ministry, and passport photographs. BIDA approves permits for terms matching the employment contract, up to 2 years per application. Permits are renewable.
The 3 most common work permit rejection reasons are: qualifications documentation that doesn’t clearly match the declared job role, a missing or incorrectly formatted NOC from the ministry, and a mismatch between the applicant’s stated experience and the job description. A rejected application resets the timeline by 4-6 weeks and requires a full resubmission with corrected documents.
Audit, accounting, and corporate services
Beyond tax filing, registered companies in Bangladesh have 3 broader areas of ongoing professional service requirements.
Statutory audit
Private limited companies and subsidiaries in Bangladesh must have their annual accounts audited by a registered auditor. The audit report is submitted to NBR with the corporate income tax return and to RJSC with the annual return filing. Branch offices and liaison offices file audited accounts with BIDA as part of their 3-year approval renewal. The auditor must be registered with ICAB (Institute of Chartered Accountants of Bangladesh). International firms or firms registered only in foreign jurisdictions cannot conduct a statutory audit in Bangladesh without a local ICAB-registered partner.
Accounting and financial reporting
Bangladesh Accounting Standards (BAS) govern financial statement preparation for companies registered under the Companies Act 1994. Most BAS are closely aligned with IFRS, which makes reporting to international parent companies more straightforward than in many other emerging markets. Foreign-invested companies entering Bangladesh often start with outsourced accounting rather than building an in-house finance function. The compliance calendar is dense in the first year, and having experienced local accountants handling bookkeeping, management accounts, and monthly filings reduces the risk of errors that attract regulatory attention.
Corporate legal and business advisory
Once operational, you’ll need more than tax and accounting support. Shareholder agreements must be maintained as ownership changes. Intercompany agreements between your Bangladesh entity and overseas related parties need to be documented for transfer pricing purposes. Board resolutions are required for any major company decision. Contracts with local clients, suppliers, and landlords should be reviewed against Bangladesh law before signing. Business advisory covers the broader picture: market entry strategy, financial planning, intercompany pricing, and structuring your Bangladesh operations to align with international group requirements.
Annual compliance after registration
Registration is the beginning. Every company operating in Bangladesh has recurring compliance obligations that continue every year. Missing these creates compounding penalties and, for branch and liaison offices, can put BIDA renewal at risk.
Annual RJSC return: all private limited companies and subsidiaries must file within 21 days of the annual general meeting. The return includes an updated list of shareholders, directors, and the registered address. RJSC charges a penalty for late filing. Companies that fail to file for 2 consecutive years risk being struck off the register.
Transfer pricing documentation: any transactions between your Bangladesh entity and an overseas related party (parent company, sister company, or any entity in the same group) must be documented under Bangladesh transfer pricing rules. NBR has increased scrutiny of intercompany transactions for foreign-invested companies. Management fees, royalties, intercompany loans, and service fee payments to the parent are all subject to arm’s-length pricing rules and documentation requirements.
BIDA renewal: branch offices and liaison offices must renew their BIDA approval every 3 years. Renewal requires audited accounts covering the full approval period, a summary of activities, confirmation of the current number of foreign employees, and updated parent company documents. Renewal delays block the company’s ability to repatriate funds and can put work permit renewals at risk.
Profit repatriation: remitting profits, dividends, management fees, or salaries abroad requires Bangladesh Bank approval or reporting through your scheduled commercial bank, depending on the transaction type. The documentation requirements for each type of remittance are specific and must be correct for the bank to process the transfer.
What to read next
These sections give you the framework. For detailed guides on specific processes, compliance requirements by entity type, tax updates, and regulatory changes, visit the KAC blog. We publish practical, up-to-date content for foreign investors operating in Bangladesh.
Explore all articles and guides on the KAC Blog
If you’re ready to talk through your specific situation, contact our team. We handle registration, compliance, audit, tax, accounting, and HR for foreign investors across all sectors in Bangladesh.