With the steady current of economic growth in Bangladesh, it is the perfect time to set foot here for Business. A branch office operates as an adjunct of the parent company. Hence, there is no need for a distinct legal organisation. With the approval of the governing body of branch office registration BIDA, a branch office can carry out its daily operations with ease. However, the branch office is required to adhere to other legal requirements outlined by the Companies Act of 1994 and register with the Joint Stock Companies and Company Register. With all the legal and procedural complexities, the branch office registration process may seem overwhelming to you. Not to worry! Khan Akber & Co will help you through this process.
A Comprehensive Guide to Setup a Branch Office in Bangladesh
The benefits and ease that the Branch Office provides make it a desirable choice to set up in Bangladesh. But you must ensure that you comply with all the legal requirements. This article details a comprehensive guide to setting up a branch office in Bangladesh along with its activities and conditions that foreign firms must take into account.
Branch Office
The branch office is perfect for foreign companies who want to establish a temporary office in Bangladesh but are not planning long term there. Branch office registration enables it to operate as an authorized company in Bangladesh. It provides greater freedom and versatility than liaison offices. BIDA is the regulatory organization for branch office registration. BIDA permits the Branch Office to conduct business in Bangladesh but only for the purposes specified in the Branch Office application. Any further activity undertaken by the Branch Office is not permissible. It can undertake business in the same manner as the parent company. However, a branch office has limited manufacturing capacity. It can subcontract them to a Bangladeshi company. Furthermore, the functioning of a branch office will be limited to the time specified in the BIDA approval letter.
Activities that are allowed for the Branch Office
The following activities are permissible for a branch office to carry out.
- A branch office can play the role of a sales representative in Bangladesh acting on behalf of the parent company.
- A branch office can conduct commercial activities in Bangladesh acting on behalf of the parent company.
- Any form of financial and technical assistance is allowed between the new Bangladeshi company and the parent company or any foreign company to grant assistance regarding cooperation.
- A branch office can provide expert and consulting services, or act as a contractor or subcontractor inside the detailed parameters of the parent company’s given job description.
- A branch office can undertake research activities acting on behalf of the parent company.
- A branch office can offer sales and after-sales to ensure appropriate distribution and marketing.
- A branch office can act as a representative for foreign airlines and shipping companies in Bangladesh
- A branch office is allowed to carry out import and export business after receiving the necessary approval.
- A branch office can conduct other commercial activities upon the authority’s or Inter-Ministerial Committee’s authorization.
- A branch office engaged in the production of goods and services is required to establish an industry in Bangladesh within ten years from the date it receives permission from the office. The renewal of branch office certification will be disregarded after ten years.
Factors to Consider Before Setting Up a Branch Office
- Age of the Parent Company: The parent company must be at least 2 years old as a formally registered company outside of Bangladesh.
- Operation Expenses: A Branch Office is required to cover all its costs using remittances from the head office or the revenue earned from BIDA-approved operations in Bangladesh.
- Name & Approval of the Branch Office: The name must be the same as the parent company and approval from BIDA (Bangladesh Investment Development Authority)
- Taxation in Bangladesh: All regular taxes are applicable to the Branch Office as it generates revenue.
- Minimal Investment Requirement: The parent company must invest no less than $50,000 or 6 months of operational costs with the expense of initial office set-up cost included.
You must also take into account the following considerations.
- The company must possess documents proving continuous profit-making for the last three financial years and net assets of at least one lakh US dollars. Or, the company must have made a profit despite loss, and have minimum net assets of at least one lakh US dollars.
- The subsidiary company of the said company may provide a minimum of 10 million USD or its equivalent financial assets on behalf of the applicant company if the applicant company is not financially sound alone. In such cases, the company may also offer an undertaking letter detailing the financial assistance given.
Required Documents to Set up the Branch Office
For BIDA (Bangladesh Investment Development Authority) Permission:
- Foreign Company’s Certificate of Incorporation
- Memorandum and Article of Association(AOA)
- Audited Financial Statements of Parent Company (Previous Two Years)
- Board Resolution for the Branch Office set-up in Bangladesh
- Complete Information of Directors
- Perfect Details of the Shareholders of the Applicant Company
- Declaration detailing the nature of the activity of the Parent Company
- declaration detailing the nature of the activity of the proposed Branch Office
- Employee List of the Proposed Branch Office
- Authorization Letter to the Consultant who shall process the application on behalf of the Applicant
The required documents mentioned above from point 1 to point 4 must be translated into English and attested by the concerned Bangladesh High Commission of the respective country.
Steps to Complete for a Branch Office Setup
1. Acquire BIDA Permission
The following procedure must be completed to get BIDA permission:
- Forming an Account with the BIDA web portal- You must form a user ID after depositing a government fee for the account creation.
- Filling out the Applicant to BIDA- Fill out the application and submit it to BIDA online.
- Approval of the Application by EC- The executive committee of the BIDA has two meetings a month. After checking and verifying the documents and the decision taken by the executive committee, BIDA shall approve the application. The average time needed to obtain approval is one month.
- BIDA Permission Letter- BIDA sends an e-letter for BIDA permission which is the basic legal document required to be recognized as an approved branch office.
2. RJSC Certificate
You must make sure to register the Branch Office with the RJSC (Register of Joint Stock Company)
3. Trade License
You must apply to the local government to get a trade license for conducting Branch Office commercial activities in Bangladesh. A commercial office address and rental agreement are needed to get a trade license.
4. Tax Identification Number
Bangladesh’s Income Tax Department gives an exclusive 12-digit number termed TIN (Tax Identification Number). Once the E-TIN is obtained, the branch office can successfully open its bank account.
5. Bank Account Opening
Setting up a bank account in any bank in Bangladesh is a must requirement.
6. Initial Investment
An initial investment of $50,000 must be remitted within two months from the date of the BIDA approval. In the circumstance of non-compliance with the mentioned two-month tenure, an additional 5 percent of the total remittance is needed to be brought to Bangladesh as a form of penalty.
7. VAT Registration
After the initial investment is received, a 13-digit online VAT Registration/BIN (Business Identification Number) will be provided to the company.
After going through all the steps, your branch office will be successfully registered and start its daily operation.
Khan Akber & Co is the perfect expert to help to get through this complex process. We offer assistance to foreign companies in registering and setting up their business in Bangladesh as well as giving quality standard accounting and compliance services.
Summary
Bangladesh is an up-and-coming investment choice for foreign firms in the rest of the world. Foreign companies can set up a branch office in Bangladesh for temporary purposes which provides great benefits and ease. BIDA regulated branch office registration, enabling business in Bangladesh for specified processes. After going through the legal considerations, allowed activities, and collecting all the documents for BIDA approval, follow the steps mentioned in the blog. If you face any obstacles while setting up a branch office here, you can always get help from an expert like Khan Akber & Co.
Frequently Asked Questions (FAQs)
Is it possible to register a foreign company in Bangladesh?
Any foreign company can establish business in Bangladesh by following the required legal guidelines in Bangladesh as mentioned in the blog.
Is the age of the parent company important for Branch Office registration in Bangladesh?
The parent company must be at least 2 years old as a formally registered company outside of Bangladesh for Branch Office set-up in Bangladesh.
Who shall bear the operational expenses for the Branch Office?
A Branch Office is required to cover all its costs using remittances from the head office or the revenue earned from BIDA-approved operations in Bangladesh.
What’s the minimum investment requirement for a Branch Office registration by foreign firms in Bangladesh?
For Branch Office set-up in Bangladesh, the parent company must invest at least $50,000 or 6 months of operational costs with the expense of initial office set-up cost included.
Who is the governing body for Branch Office registration in Bangladesh?
BIDA acts as the regulatory body for Branch Office registration in Bangladesh.
