Transfer pricing rules apply to your Bangladeshi company the moment it enters a single international transaction with an associated enterprise. There’s no minimum value, no grace period, and no exemption for a first year of trading.
What changes with size is how much work follows. 3 obligations sit at 2 different levels:
- Statement of international transactions, filed with your income tax return. No threshold.
- Transfer pricing documentation, once aggregate international transactions pass BDT 30 million
- Independent accountant’s report, at the same BDT 30 million mark
Most foreign-owned subsidiaries in Bangladesh trigger the statement on day 1 and don’t realise it. A management fee to the parent, a loan from the group, software licensed from head office, all of it counts. We handle the analysis and the filings as transfer pricing advisory and documentation, inside your annual NBR obligations.
What counts as an international transaction
The Bangladesh Transfer Pricing Regulations came in through the Finance Act 2014 and follow OECD guidelines closely. They require that income from international transactions between associated enterprises is computed at the arm’s-length price.
The scope is wider than a sales invoice. It reaches:
- Any expense or interest arising from an international transaction
- Allocation, apportionment or contribution to any cost or expense
- Costs connected to a benefit, service or facility provided to one or more of the enterprises
Cost allocations are the line people miss. A parent that spreads its global IT or HR cost across subsidiaries has created an international transaction, even where no invoice describes it as a sale.
The deeming rule that catches unrelated parties
A transaction with a party that isn’t an associated enterprise gets treated as one anyway, where control exists between that party and an associated enterprise in relation to the transaction.
Routing a purchase through an unconnected intermediary doesn’t move it outside the regulations, if the group controls the terms.
The 3 obligations and where each one starts
| Obligation | Threshold | When |
|---|---|---|
| Statement of international transactions | None. Any international transaction triggers it | Filed with the income tax return |
| Transfer pricing documentation | Aggregate value above BDT 30 million | Maintained, produced on request |
| Independent accountant’s report | Aggregate value above BDT 30 million | Obtained for all international transactions between associated enterprises |
The statement goes in with every return where an international transaction happened, at any value. A subsidiary with BDT 500,000 of intercompany charges files it on the same basis as one with BDT 500 million.
The threshold is measured on aggregate value, not per transaction. 12 monthly charges of BDT 3 million each add up to BDT 36 million and pull you over the line, even though no single payment comes close.
Because the statement attaches to the return, the transfer pricing position has to be settled before filing rather than after. The filing sequence is in the company income tax return.
How the arm’s-length price gets tested
Bangladesh applies a range in some cases and a single figure in others, and which one you get depends on 2 conditions.
The range concept applies where both hold:
- The most appropriate method is the comparable uncontrolled price method, the resale price method, the cost plus method, or the transactional net margin method
- There are at least 6 comparables
Where the range applies, the arm’s-length range runs from the 30th to the 70th percentile of the data set. A price inside that band is accepted.
Fail either condition and the arithmetic mean applies instead. That’s a single number rather than a band, and it leaves far less room.
Finding 6 comparables in a Bangladeshi market is harder than it sounds for a specialised business. Where the comparable set is thin, plan for the arithmetic mean and price accordingly, because discovering the shortfall during an audit gives you no time to adjust.
2 rules that catch foreign parents funding a subsidiary
Both sit next to the transfer pricing regime rather than inside it, and both bite on the same decision: how you put money into your Bangladeshi entity.
The 70:30 debt-to-equity guide
Bangladesh has no specific thin capitalisation regime. BIDA (Bangladesh Investment Development Authority) has nonetheless recommended, while setting requirements for foreign loans, that a Bangladeshi company’s debt-to-equity ratio should not exceed 70:30.
It’s a recommendation rather than a statutory cap. It’s also the number your foreign loan approval gets measured against, which makes the distinction academic in practice.
The 12% interest floor on associate loans
Interest on a loan received by an associate entity at a rate below 12% per annum is treated as income from a business or profession. Banks, finance companies and leasing companies are outside this rule.
Foreign parents often lend to a new subsidiary at a token rate, or interest-free, on the reasoning that it’s their own money either way. The rate is what the treatment turns on, so set it deliberately and document the reasoning.
3 things Bangladesh doesn’t have
Knowing what’s absent saves as much time as knowing what applies.
- No group taxation. There’s no group relief in Bangladesh, so losses in one group company cannot be set against profits in another. Each entity stands alone.
- No controlled foreign company rules. Bangladesh has no CFC regime.
- No statutory thin capitalisation regime, beyond the BIDA ratio above.
The first one changes structuring decisions. A group planning to run a loss-making Bangladeshi entity alongside a profitable one, expecting to net them off, should model each separately from the start.
4 mistakes with intercompany transactions
1. Assuming a small subsidiary is below the radar
The statement of international transactions has no threshold. Size affects documentation and the accountant’s report, not the filing itself.
2. Measuring the threshold per transaction
BDT 30 million is an aggregate figure across the year. Regular small charges reach it without any single one looking significant.
3. Treating cost allocations as internal bookkeeping
A share of the parent’s global overhead pushed down to the Bangladeshi entity is an international transaction. It needs the same pricing support as a sale.
4. Leaving the analysis until the return is due
The statement attaches to the return, and the accountant’s report takes time to obtain. Both belong in the same schedule as the statutory audit, alongside a subsidiary’s annual filings.
Getting the position documented before it’s tested
We map every intercompany flow for foreign-owned subsidiaries, set the pricing basis, prepare the documentation where the BDT 30 million threshold is crossed, and obtain the accountant’s report. That work runs on the same calendar as the audit and the return under the KAC Corporate Compliance Architecture, so nothing is being built during filing week.
For a review of your intercompany arrangements, talk to our team.
Transfer pricing rules reflect the regulations as currently applied under the Income Tax Act 2023. Thresholds and methods change with each Finance Act. Confirm your position with a qualified adviser before filing.
Frequently asked questions
When do transfer pricing rules apply in Bangladesh?
From the first international transaction with an associated enterprise. There is no minimum value. A statement of international transactions must be filed with the income tax return whatever the amount, and documentation obligations begin above BDT 30 million in aggregate.
What is the transfer pricing threshold in Bangladesh?
BDT 30 million of aggregate international transactions in the year. Above that figure, the company must maintain transfer pricing documentation and obtain an independent accountant’s report covering all international transactions between associated enterprises. Below it, only the statement of international transactions is required.
Does a small subsidiary in Bangladesh need transfer pricing documentation?
Only above BDT 30 million in aggregate international transactions. Below that figure it still files the statement of international transactions with its income tax return, since that obligation carries no threshold at all, regardless of the company’s size, turnover or age.
Can group companies offset losses against each other in Bangladesh?
No. Bangladesh has no group taxation concept and no group relief, so a loss in one group company cannot be set against the profit of another. Each entity is assessed separately, which affects how a group structures and funds loss-making operations.
What interest rate should a foreign parent charge a Bangladeshi subsidiary?
Interest on a loan received by an associate entity below 12% per annum is treated as income from a business or profession. Banks, finance companies and leasing companies are excluded. BIDA also recommends a debt-to-equity ratio no higher than 70:30.
