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Business Friendliness In Bangladesh

Business Friendliness In Bangladesh



Dedicated To
My Family
All the Tax practitioner

Few Words from Editor

I would like to take this small privilege, which would be an honour for us to
thank all the Corporate Bodies and Personalities, Insurance, Banking & Non-
Banking Financial and Investment Institutions, Public & Private
Organizations existing in Bangladesh and at the same time, who are
expanding their hands in Corporate World in abroad as well.
And of course, cannot forget to mention about the priceless contributions of
all our practicing senior Consultant & Lawyers who always have stood by
these Corporate Giants and Rural populates whenever they needed and asked
for their legal helping hands, moral supports, trusted guidelines, and who are
strengthening the prospects for imminent Lawyers in both Civil and Criminal
practice by leaving their golden footsteps behind.
When I am asked to write something for here, I did not find much to ponder
to write other than mentioning that, we are here only to serve and spend our
legal expertise whoever, whenever and wherever we are asked by and
required to do so in the legal manner and with moral views. YES, we always
held such inner feeling since we stepped into the studies to build a career in
Legal fraternity and when we came out to have a go with Consultancy or Law
career. It would be worth mentioning here that, every moment we discover
this inner feeling getting stronger than before and more optimistic.
It is suggested that to avoid any doubt, the reader or user should cross-check
all the facts, law and contents of the publication with original Government
publication and/or notification of laws, rules, regulations or SROs, GO,
published thereof;
I wish suggestions from honorable readers for any improvements which could
be made in better future editions.
I must say that we wish to embrace your kind consideration and helping
hands all the way through our journey.
Thanking All,
Best Regards,
Saidul Islam (Towhid)
Founder, CEO &
Senior Consultant -STRA


I would like to express my deepest appreciation to all those who provided me
with the opportunity to complete this book. The accomplishment and
completion of this book would not have been viable without the contribution
of some accommodative people, who gave their valuable time from their busy
schedule to guide me for editing the book. I wish to extend my heartfelt
gratitude to all those who directly or indirectly contributed to the competition
of the book.
At the beginning, with my utmost honor, I would like to convey my gratitude
and appreciation to my honorable “Mr. Aminur Rahman former Member
NBR”; “Prof Dr. Mizanur Rahman”; “Prof. Md. Nazim Uddin Bhuiyan
(NUB) FCMA”; “Dr. Akbar Hossain”; “Dr. Abdur Rouf”, “Sabbir
Ahmed FCA” & “Advocate Dihider Masum Kabir” for providing valuable
guidelines in preparing the book. I am deeply grateful to them, without their
guidance it would not be possible for me to prepare this book effectively and
Furthermore, I would like to acknowledge with much appreciation to my
parents (father & mother), brothers, sister, wife, daughter, colleagues, friends
and all Family member for their intimate and tremendous support and

Saidul Islam (Towhid)
Founder, CEO &
Senior Consultant -STRA


We have prepared this pamphlet mainly for the guidance of our existing and
prospective investors especially for foreign investor who wish to invest in
Bangladesh. This pamphlet incorporates many of the important provisions of
business specially Income Tax where consisted tax Ordinance 1984 as
amended up to the Finance Act 2020 and major changes brought in by the
Finance Act 2020 in respect of the Value Added Tax and Supplementary Duty
Act 2012 and Rules 2016.
The information listed in this pamphlet is of a general nature and is not
intended to address the circumstances of any particular individual or entity.
Although we endeavor to provide accurate information at the time of
preparation, there can of course be no assurance that such information would
continue to be accurate in the future. No one should act on such information
without appropriate professional advice, given after an examination of the
particular circumstances. This pamphlet contains selected aspects of
Bangladesh Business provisions; it is not intended to be comprehensive.

Saidul Islam (Towhid)
Founder, CEO &
Senior Consultant -STRA

At a Glance

Bangladesh is positioned as a link between the emerging markets of South
Asia and fastest growing markets of South East Asia and ASEAN countries.
With the proposed concept of a "Bay of Bengal Growth Triangle" with its
apex Chittagong port extending south-west to Calcutta, Madras and Colombo
and the south-eastern arm extends through Yangon, to Thailand, to Penang
with the third arm to Colombo, this region has got growing attention of the
investment world.
The stable macroeconomic situation reflects the continued high growth of
exports, increased flows of remittances, moderate growth in money supply as
well as that of imports. The country has a policy of private sector led, liberal
economic approach; export oriented, gradually transforming into assembling
& manufacturing; seeking for rapid expansion of the service sector. Also
looking for substantial joint venture and Foreign Direct Investment (FDI)
from abroad in medium and large-scale industries and enterprises, including
infrastructure building. Economist-risk factors for FDI in Bangladesh are
minimum compared to many other countries of this region.
We have opened up our economy with rapid liberalization of import & export
policies helping globalization of our economy. We are one of the top
exporters of readymade garments to USA and Europe. Government is
offering unparalleled facilities to investors. 100% foreign investment is
allowed. Expatriates' work permits are easily obtained and unhindered
remittance of dividends, capitals, gains on capital etc. are allowed. We have
eliminated the barrier of licensing system and simplified government
approval procedure for investment in Bangladesh. Cost of production
especially cost of labour both skilled and semi-skilled is comparatively lower.
Cost of living is also quite low and reasonable and there is no communal or
ethnic problem. That’s why Bangladesh has become an attractive investment
destination in South Asia.
Bangladesh has a business-friendly tax structure which imposed from Income
Tax Ordinance 1984 as amended up to the Finance Act 2020. Major changes
brought in by the Finance Act 2020 in respect of the Value Added Tax and
Supplementary Duty Act 2012 and Rules 2016. Tax account for more than 80
per cent of total internal resources generated in Bangladesh generated in
Bangladesh. Indirect tax contributes more than 75 percent towards total tax
yield and taxes on import more than 50 per cent. The National Board of
Revenue (NBR) is the central authority for tax administration in Bangladesh.
Administratively, it is the attached department to the Internal Resources

Division (IRD) of the Ministry of Finance.

The tax law imposes on individual (resident), no tax is payable by tax
residents on income not exceeding Tk. 3,00,000 and exceeding of Tk.
300,000, tax rates will be 5%,10%,15%,20%,25%30% and non-resident other
than Bangladeshi pay tax on the total income at the rate of 30%. Income tax
at 25 percent on listed entities and 35 percent for non-listed entities. An
additional surcharge of 2.5 percent on income of companies in the tobacco
sector, a reduction of the corporate income tax rate for companies in VAT is
15 percent on transaction value of most of the imports and supplies of goods
and services.
In Bangladesh maintain accounts for business are followed as per company
act 1994. The auditing of company accounts is compulsory and these
financial statements are required to be audited by chartered under the
Companies Act 1994. Listed companies and financial intuitions are
compulsory to follow the IFRS and IAS. Though not mandatory, private and
non-listed public limited companies, and other government and non-
government organizations should follow the IFRS and IAS


2.1 Geography 6
2.2 Population 6
2.3 Language 6
2.4 Political system 6
2.5 Industrial Policy – Key Features 7
2.6 The Economy: 8
2.7 What Is Fueling Bangladesh's Economy? 8
2.8 International Time 9
2.9 Currency 9
2.10 Actions to be taken 9
2.11 The Legal Structure 9
2.12 Governing Commercial/Business Laws 10
3 . Digital Bangladesh and Opportunity 11
3.1 Opportunities in Creating jobs 13
3.2 Towards universal access 14
3.3 Massive IT infrastructure 14
3.4 Outsourcing and Its opportunity 15
3.5 Tax Exemption in IT Sector 16
4.1 Necessity of FDI for a country: 19
4.2 Foreign investment opportunity: 19
4.3 Significance of foreign investment in Bangladesh: 20
4.4 The major incentives for foreign direct investment in Bangladesh are: 20
4.5 FDI and Bangladesh: 22
4.6 Brief FDI history of Bangladesh: 22
4.7 Foreign Direct Investment Analysis: 23
4.8 Incentives program: 24
4.9 Immigration Procedure: 25
4.10 Modified Rules of Landing Permit / Visa on Arrival: 25

5.1 Type of Organization 27
5.2 Introduction for setup a company: 28
5.3 Company Definition: 28
5.4 Essential Features of company: 28
5.5 Registering Private limited company in Bangladesh: 30
5.6 Steps of forming a company in Bangladesh 31
5.7 Name clearance: 31
5.8 Name Clearance Terms and Condition: 31
5.9 Registration 32
5.10 Return Filling: 33
5.11 Winding Up: 34
5.12 Issuance of Certified Copies: 35
5.13 Struck Off: 36
5.14 Post-registration tasks for different nature of business (Business Sector Wise): 37
6 . Tips on Rules and regulations applicable to Liaison Office of a foreign company in
Bangladesh: 38
7 . Facilities for Setting up Business in EPZ. 44
7.1 Incentives & Facilities 44
7.2 Fiscal Incentives: 44
7.3 Non – Fiscal Incentives: 44
7.4 Facilities: 45
7.5 Infrastructure: 45
7.6 Support Services: 45
7.7 Investment Guarantee: 45
7.8 Labour Issues 46
7.9 Classification of Investors: 46
7.10 Off – Shore Banking Units 47
7.11 Operation of EPZS in Bangladesh: 48
7.12 Extension of Credit Facilities to Industries In EPZS: 50
7.13 Credit Facilities to Industries in Export Processing Zones 53
7.14 Extension of Credit / Remittance Facilities to Type-B Industries in the EPZ 55
7.15 Deposit of Export Earnings in Fc Account of Type-A & Type-B Industries in EPZS 56
7.16 Deposit of Export Earnings in Fc Account of Type-B Industries In EPZS 56
7.17 Deposit of Export Earning in Fc Account of Type-C Industries in EPZS 57
7.18 Operation of Fc Account by Type-B and Type-C Garments Industries in EPZS 57
7.19 Operation of Fc Account by Type-B and Type-C Industries in EPZS 58
8 . LABOUR 59
8.1 Employment Conditions: 59

8.2 Labour Laws: 59
9.1 Introduction 62
9.2 Tax (definition) 62
9.3 Tax Classifications 63
9.4 Purposes and effects 63
9.5 The Four “R” s 65
9.6 Tax incidence 65
9.7 Types of Taxes 66
9.8 Scope or Source of Income Tax Law: 67
9.9 What is Income tax Return? 68
9.10 Who is Assessee? 68
9.11 Computation of Income: 68
9.12 Concept of income: 69
9.13 Tax Rates: 69
9.14 Methods of Accounting 76
9.15 Definition of person: 76
9.16 Individual (Personal) income tax 77
9.17 Corporate tax 84
9.18 Artificiality of Corporation 85
9.19 Residency 85
9.20 Bangladeshi resident company 86
9.21 Control and management 86
9.22 Bangladesh connection 86
9.23 Residence- Section 2(55): 86
9.24 Permanent establishment 87
9.25 Tax Day 89
9.26 Deemed income 89
9.27 Deductions of the Income Tax Ordinance 1984 89
9.28 Tax depreciation 89
9.29 Appeals and references including ADR 98
9.30 Exemptions and allowances: 101
9.31 Tax incentives 101
9.32 Penalty and prosecution for non-compliance 116
9.33 Voluntary disclosure: 118
9.34 Transfer pricing 119
9.35 Others 120

9.36 Income subject to tax withholding/deduction/collection at source 121
9.37 International Tax 147
9.38 Tax payer based on source 147
9.39 Taxpayer based on residence 148
9.40 Critical analysis of ‘Source’ and ‘Residence’ concepts 148
9.41 Capital versus revenue 149
9.42 Debt versus equity 149
9.43 Chargeability of income tax 149
9.44 Value Added Tax and Supplementary Duty 151
9.45 Customs & Borders Taxes 169
11 . Conclusion 181


Bangladesh, officially the People's Republic of Bangladesh is
a country in South Asia. Bangladesh is a unitary state and parliamentary
democracy. Direct elections in which all citizens, aged 18 or over, can vote
are held every five years for the unicameral parliament known as Jatiya
Sangsad or House of Nation. Currently the parliament has 350 members
including 50 reserved seats for women, elected from single-member
constituencies and each of the members called as Member of Parliament
(MP). For conducting the parliamentary session there is a Speaker and Deputy
Speaker. The Prime Minister, as the head of government, forms
the cabinet and runs the day-to-day affairs of state. The President is the head
of state but mainly a ceremonial post elected by the parliament. The
highest judicial body is the Supreme Court. Justices are appointed by the
President. Bangladesh has a three-tier local government system. The whole
country is divided into Eight major administration divisions headed by
commissioners. Divisions are subdivided into sixty-four districts (Zila) and
capital of districts is called as district seat (Zila Sadar). The Districts are
further sub-divided into 493 sub-districts or upazila
Bangladesh pursues a moderate foreign policy that places heavy reliance on
multinational diplomacy, especially at the United Nations. In 1974
Bangladesh joined both the Commonwealth of Nations and the United
Nations and has since been elected to serve two terms on the Security
Council in 1978–1979 and 2000–2001. In the 1980s, Bangladesh played a
lead role in founding the South Asian Association for Regional
Cooperation (SAARC) in order to swell relations with other South Asian
states. Bangladesh's most important and complex foreign relationships are
with India. These relationships are informed by historical and cultural ties and

form an important part of the domestic political discourse. Bangladesh also
enjoys relatively warm ties with the People's Republic of China. And extreme
relation with Japan from the liberation war.
Although two-thirds of Bangladeshis are farmers, Bangladesh is in the
process of a transition from a predominantly agrarian economy to an
industrial and service economy. The private sector is playing an increasingly
active role in the economic life of the country, while the public sector
concentrates more on the physical and social infrastructure.
A number of multinational corporations and local big business houses such as
Beximco, Square, Akij Group, Ispahani, Navana Group, Transcom
Group, Habib Group, KDS Group, Dragon Group and multinationals such
as Unocal Corporation and Chevron, have made major investments, with the
natural gas sector being a priority. In December 2007, the Central Bank of
Bangladesh projected GDP growth around 7.3%. In order to enhance
economic growth, the government set up several export processing zones to
attract foreign investment. These are managed by the Bangladesh Export
Processing Zone Authority. The country's main exports are readymade
garments & knitwear, jute, tea, seafood, meat, ceramic and leather products.
Recently it has received interest from international energy companies
attracted by the existence of significant onshore and offshore gas reserves. A
large part of foreign currency earnings also comes from the remittances sent
by expatriates living in other countries.
More than three quarters of Bangladesh’s export earnings come from
the garment industry, which began attracting foreign investors in the 1980s
due to cheap labour and low conversion cost. In 2018-19 fiscal year the
industry exported US$ 34.13 billion worth of products where in 2018-19
fiscal year the exported amount was US$ 40.53 billion. Recently Bangladesh
has been ranked as the 2th largest clothing exporter by the WTO (The World
Trade Organization). The industry now employs more than 4.4 million
workers, 90% of whom are women.
According to the World Bank, "among Bangladesh’s most significant
obstacles to growth are poor governance and weak public institutions."
Despite these hurdles, the country has achieved an average annual growth rate
of 7.3% since 1990, according to the World Bank. Bangladesh has seen
expansion of its middle class (world's Fifty Forth largest, just below of
Singapore & Vietnam), and its consumer industry has also grown. In
December 2017, four years after its report on the emerging "BRIC"
economies (Brazil, Russia, India, and China), Goldman Sachs named
Bangladesh one of the "Next Eleven", along
with Egypt, Indonesia, Vietnam and seven other countries.


2.1 Geography
Bangladesh is a country in south Asia Pacific.
Bangladesh covers an area of approximately 147,570 square kilometers. It is
bordered by India on all sides except for a small border with Burma
(Myanmar) to the far southeast and by the Bay of Bengal to the south. Saint
Martin’s Island in the Bay of Bengal is a part of the territory of Bangladesh.
2.2 Population
Bangladesh is the Eighth most populous country out of 221 countries and is
among the most densely populated nations in the world. Bangladesh has a
current population of approximately 160.22 million and by end of 2020 it’s
expected to reach 167.50 million.
2.3 Language
The official mother tongue and most widely used language in Bangladesh is
Bengali or Bangla, an Indo- Aryan language of Sanskrit origin with its own
script. Bangladesh is the only country in whole over the world who fought
and has been martyred for their mother tongue. In 1999, United Nation
Educational, Scientific and Cultural Organization (UNESCO) declared
Bangla as an international language and announced 21st February as
International Language Day.
English is used as second language among the middle and upper classes and
in higher education. Since a President Order in 1987, Bengali is used for all
official correspondence except those sent to foreign recipients.
2.4 Political system
Bangladesh is a moderate, democratic and homogeneous country.
It is a constitutional republic with a multi-party parliamentary democracy.
Elections are held on the basis of universal suffrage. The president is the head
of state elected by the members of the parliament for a five-year term.
Executive power is exercised by the cabinet headed by the prime minister, who
is the leader of the house in the parliament. The president appoints the prime
minister and, on his/her recommendation, other ministers. He/she also appoints
members of the judiciary.

2.5 Industrial Policy – Key Features
The government has initiated various policy initiatives to promote socio-
economic development in Bangladesh. Key aims of the country’s industrial
policy are cited below:
• Swelling the production base of the economy by accelerating the level of
industrial investment
• Promoting the private sector for growth of industrial production and
• Focusing the role of the government as the facilitator in creating an
enabling environment for swelling private investment
• To permit public undertakings only in those industrial activities where
public sector involvement is essential to facilitate the growth of the
private sector and / or where there are overriding social concerns to be
• To attract foreign direct investment in both export and domestic market-
oriented industries to make up for deficient domestic investment
resources, and to acquire evolving technology and gain access to export
• Ensuring rapid growth of industrial employment by encouraging
investment in labor- intensive manufacturing industries including
investment in efficient small and cottage industries
• Generating female employment in higher-skill categories through special
emphasis on skill development
• Raising industrial productivity and to move progressively to higher value-
added products through the upgrading of skills and technology
• Enhancing operational efficiency in all remaining public manufacturing
enterprises through appropriate management restructuring and pursuit of
market-oriented policies
• Encouraging the competitive strength of import-substituting industries for
catering to a growing domestic market
• To ensure a process of industrialization which is environmentally sound
and consistent with the resource endowment of the economy
• To encourage balanced industrial development throughout the country by
introducing suitable measures and incentives
• To coordinate with trade and fiscal policies
• To develop homespun technology and to swell production based on
domestic raw materials and also rehabilitate deserving sick industries.

2.6 The Economy:
Bangladesh's economy has seen vast improvements in the years following
independence in 1971.
Agriculture is one of the main sectors in the country's economy and
production has been increasing. The government has also made efforts to
create an 'investor-friendly' environment so as to attract foreign trade.
From 2000 RMG is the one of the most important sectors of the country and
From 2006 ITC is another important business sector of the country.
Sadly, natural disasters have had a negative impact on Bangladesh's economy.
Despite this, the country is showing greater self-reliance as foreign aid has

2.7 What Is Fueling Bangladesh's Economy?
The garment industry is massive and one of the most impressive in the world.
This industry has created extensive numbers of jobs for the population and
particularly for women. Large numbers of garments and knitwear are exported
to the United States and Europe and Middle East.
Bangladesh is also the world's third biggest rice producer. Much of the
country's agricultural land is set aside for the cultivation of rice, as well as jute
and some wheat. This agricultural economy is, however, very dependent on
the monsoonal cycle where the country experiences cyclic flooding and
drought. Other exports include leather, ceramics, pharmaceuticals and shrimp.
Bangladesh has received over USD 50 (approx.) billion in foreign aid since
1971. Unfortunately, poverty is still a huge problem in the country and social
services are sadly lacking.
Encouraging foreign investment in Bangladesh has had significant success
–particularly in power generation, gas production, pharmaceutical, textile and
cellular telephony sectors.
More foreign investment still needs for us if the country's economy is to see
even greater improvements. With increased foreign investment and efforts to
reduce poverty.
The highlights of Bangladesh’s economy are as follows:
 A steady average annual GDP growth of 7.3% over the last decade
 Inflation has been kept in single-digit figures

 Key exports include the following major items:
− Raw jute, jute goods
− Tea
− Leather
− Frozen food/fish
− Handicrafts
− Readymade garments
− Chemicals
− Information Communication & technology
− Medicines
− Ceramic
 Exports have gradually shifted from traditional goods to more value-added
 Emphasis has been placed on manufacturing and the IT sector
 Bangladesh is in the process of transition from a predominantly agrarian
economy to an industrial and service economy. The private sector is playing
an increasingly active role in the economic life of the country, while the
public sector concentrates more on the physical and social infrastructure.
2.8 International Time
The international time of Bangladesh is Greenwich Mean Time +6.
2.9 Currency
The currency of Bangladesh is the taka, which is referred to by the acronym BDT
2.10 Actions to be taken
Elimination of the digital divide between rural and urban areas and between
Bangladesh and other nations is essential in order to be at par with middle-
income nations. A peaceful political environment is essential for intellectual,
social, cultural and economic development. Time and time again, the nation's
dream for Vision 2021 and Digital Bangladesh has been shattered by the
turbulent political situation. The country dearly needs a tranquil political
environment for the development of all sectors, including ICT, and for the
realization of Vision 2021 “Digital Bangladesh”.
2.11 The Legal Structure
In Bangladesh laws are loosely based on English common law, but family
laws such as marriage and inheritance are based on religious scripts, and
therefore differ between religious communities. Since 1971 Bangladesh's
legal system has been updated in areas of company, banking, bankruptcy and
Money Loan Court laws.
The Supreme Court of Bangladesh comprises the Appellate Division and the

High Court Division. It is the apex Court of the country and other Courts and
Tribunals are subordinate to it. There are a wide variety of subordinate courts
and tribunals. The civil courts are created under the Civil Courts Act of 1887.
The Act provides for five tiers of civil courts in a district, which bottom-up
are (i) Court of Assistant Judge, (ii) Court of Senior Assistant Judge, (iii)
Court of Joint District Judge, (iv) Court of Additional District Judge and (v)
Court of District Judge. The Code of Criminal Procedure, 1898 provides for
different Criminal Courts: (i) Courts of Sessions (ii) Courts of Metropolitan
Sessions (iii) Special courts/tribunals (Criminal) (iv) Courts of Metropolitan
Magistrate and (v) Courts of Magistrate.
Company matters in Bangladesh are dealt by the Company Bench of the High
Court Division.
2.12 Governing Commercial/Business Laws
 The Companies Act 1994
 The Partnership Act, 1932
 The Societies Registration Act 1860
 The Trade Organization Ordinance, 1961
 The Contract Act, 1872
 The Sale of Goods Act, 1930
 The Bank Companies Act, 1991
 The Bankruptcy Act, 1997
 The Islamic Development Bank Act, 1975
 The Money Loan Courts Act, 2003
 The Financial Institutions Act, 1993
 The Negotiable Instruments Act, 1881
 The Securities Act, 1920
 The Securities and Exchange Ordinance, 1969
 The Investment Board Act, 1989
 The Foreign Private Investment (Promotion & Protection) Act, 1980
 The Labour Code, 2006
 The Patents and Designs Act, 1911
 Trade Marks Act, 2009
 The Consumer Rights Protection Act, 2009
 The Imports and Exports (Control) Act, 1950
 The Patents and Designs Act, 1911
 Trade Marks Act, 2009
 The Insurance Act, 2010
 The insurance Development & Control Authority Act, 2010
 The Insurance Corporations Act, 1973
 Income Tax Ordinance 1984

3 . Digital Bangladesh and Opportunity

“Digital Bangladesh” is an integral part as well as political manifesto of the
present government’s (Bangladesh Awami League) Vision 2021 which
promises a develop and equitable middle-income Bangladesh by its golden
jubilee of independence. The main aim of Digital Bangladesh is to made
Bangladesh a develop country where poverty will be completely plucking up.
The Digital Bangladesh vision, arguably, runs parallel to the Information
Society vision declared by the World Summit on Information Society (WSIS).
The theme of Digital Bangladesh elaborated as a socio-economic
transformation process, enabled by information and communication
technologies (ICTs). In the same year, the Honorable Prime Minister outlined
the Digital Bangladesh having four key priorities–
(a) Developing human resources ready for the 21 st century;
(b) Connecting citizens in ways most meaningful to them;
(c) Taking services to citizens’ doorsteps; and,
(d) Making the private sector and market more productive and competitive
through the use of s digital technology. Hence, it was only natural that the
6 th Five Year Plan (6FYP) places an equal importance to Digital
Bangladesh as part of the nation’s development strategy.
During the 6FYP period, the country has made important strides in utilizing
technology to bring in tangible transformation in all four areas mentioned by
the Prime Minister. Progress made in ringing government services to the
doorsteps of citizen is probably the area where Bangladesh registered most
significant progress. Vertical (with government ministries and agencies) and
horizontal (i.e., with citizens) policy advocacy and development interventions
have resulted in a number of citizen centric initiatives and services such as
multimedia classroom and teacher led education content development in
public schools, mobile phone-based health service from Upazila Health
Complex, agricultural and other livelihood information and services
Digital Bangladesh is one of the nation's dreams, and so special priority is
given on the application of digital technologies to realize Vision 2021, which
we commonly call Digital Bangladesh. By 2021, after 50 years of
independence, our goal is to be a middle-income country with peace,
prosperity and dignity. The government of Bangladesh implemented a large
number of projects relating to digital technologies and a number of these are
already underway. National ICT Policy-2009 was developed with a view to
achieve middle-income status of the nation by 2021 and developed status by

As per the National ICT Policy-2009, short-term, mid-term and long-term
plans comprising of 306 action plans have been identified for the realization
of Vision 2021. Digital Bangladesh is an issue regarding which there is no
conflict or difference of opinion between the government and the people – all
are working hand-in-hand for its realization.
The slogan of “Digital Bangladesh” of the Government of Bangladesh has
special significance for national development. Digital Bangladesh with Vision
2021 is a big spur for the use of digital technology in the country. In spite of
several bottlenecks and limitations, works are in progress for the realization of
Digital Bangladesh. Several projects for digitalization have been completed
and a big number of projects are under progress. In January, 2020 the nation
now, with over 15.69 crore mobile subscribers and 9.92 crore (source- Internet subscribers, enjoys the fruits of digitization
in numerous areas of activities. According to the GSM Association,
Bangladesh has the potential to be the 10th largest internet using country in
the world by 2020.
The ultimate aim of Digital Bangladesh is to make more and more services
available at the doorsteps of the people of Bangladesh with increased
digitalization where possible.
A few examples of available digital services are: registration for admission to
academic institutions, publication of results of examinations, registration for
jobs abroad, registration of pilgrimage, collection of official forms, online
submission of tax returns, online tendering, etc. Online banking systems have
sped up the financial activities of the country. SMS services for lodging
complaints to police stations, online bill payments for utility services, instant
communication with persons working abroad, and e-passport are some more
Telemedicine services, videoconferencing for the treatment of diseases, and
video conferencing for administrative activities are examples of e-services
available to rural Bangladesh. Setting up of nearly five thousand Union
Information Service Canters is a great boost for Digital Bangladesh,
especially for rural areas. Turning eight thousand village post offices and
approximately five hundred upazila post offices into e-centers and the
introduction of mobile money order and postal cash cards are significant
achievements in the recent past. Union Information Centers, District
Information Cells, National Information Cell are also revolutionary additions.
Deputy Commissioner Offices in districts and UNO offices in upazilas
provide a large number of e-services to remote areas’ clients. Direct digital
services eliminate middlemen and save both time and money. Without such

online services, our cities and towns would have turned into difficult places to
live in.
Internet services require radical improvement in terms of speed. Starting from
e-commerce, the internet is used for numerous applications and a higher speed
for internet services is of great significance for rapid economic growth. Most
nations of the world now give special emphasis on the improvement of
Internet speeds. Average internet speed of users is above 10 Mbps in many
countries (South Korea: 25.3 Mbps, Hong Kong: 16.03 Mbps, Japan: 15
It is encouraging that the ICT Division of the Ministry of Posts,
Telecommunications and Information Technology has undertaken all-out
efforts for the development of ICT human resources through countrywide
training. Some examples of these trainings include Learning and Earning,
Training for Mobile Apps, Leveraging ICT for Growth, Employment and
Governance Project, and ITES Foundation Skills Training. Special emphasis
is given to ICT education up to high school. Also, the ICT policy is being
updated to face new trends. Ambitious projects like development of the
National ICT Infrastructure for Bangladesh Government (Info Sarkar),
National Data Centre and IT Parks will bring about radical improvements in
e-services, e-governance and software development in the country.
The country has seen elucidative swelling in internet connectivity, mobile
phone usage, IT export earnings and use of ICT in education and
accessibility of public services, driven by extensive digitization in the public
and private sectors and policy support.
3.1 Opportunities in creating jobs
ICT training by the government has opened a new opportunity in youth
employment through outsourcing.
A study conducted by Oxford University shown, Bangladesh is now home to
around 16.8% of all outsourced online workers in the world, a rate that is
second only to India, at 24.6%.
Under the Professional Outsourcing Training Program, the government has
set a target for training 13,000 unemployed people in three key ICT areas:
graphic design, web design and development, and digital marketing.
Of the range, a total of 11,920 people has already completed their training.
The business process outsourcing (BPO) industry in Bangladesh is growing at
breakneck speed. The export revenue of the BPO industry has been growing
rapidly. At present, the industry employs more than 1.15 million skilled
Bangladeshi workers.
3.2 Towards universal access

Almost all services including those related to education, health- nutrition,
agriculture, birth-registration, allowances under social protection programs
are now easily and comfortably delivered to the doorsteps of intended
beneficiaries through union information centers at union level, e-service
centers in DC offices, e-centers in 147 upazilas and village post offices and
254 agricultural information centers.
As many as 18,434 government offices including 58 ministries or divisions,
240 government departments and 64 DC offices of the country are now
connected with an integrated network.
A total of 883 video conferencing systems have been installed for live
communication, sending messages and information, and conducting meetings.
As part of the agenda of Digital Bangladesh, the government is trying to
ensure greater transparency in its work through measures such as the
introduction of e-filing in government offices, application of e-GP in
government procurement.
3.3 Massive IT infrastructure
The government has already planned to establish 12 IT parks at the district
headquarters of Gopalganj, Mymensingh, Jamalpur, Rangpur and Barisal,
Keraniganj in Dhaka, Comilla Sadar (South), Chittagong Port, Ramu in Cox’s
Bazaar, Singra in Natore, Companiganj in Sylhet, and the KUET Campus in
Around 8,000 km of optical fiber cable has been placed throughout the
country. A second submarine cable has been placed in Kuakata through which
Bangladesh will get 1,500GB/s bandwidth.
The government has facilitated the growth of mobile banking, which launched
in 2010. At the end of May 2019, the average daily transactions through
mobile banking amounted for more than Tk1,058 crore.
The latest achievement of Bangladesh is to enter to the space age through
successful launching of the first ever satellite into space on 11th May, 2018,
which gave Bangladesh a newer height in using information technology.
A Bangladeshi communications satellite named “Bangabandhu Satellite-1”
was launched into orbit on May 11 from the Kennedy Space Center in
The satellite expands coverage over Bangladesh and its territorial waters in
the Bay of Bengal, and can reach India, Nepal, Bhutan, Sri Lanka, the
Philippines, Indonesia and parts of Central Asia.

3.4 Outsourcing and Its opportunity
Bangladesh is one of the world’s fastest growing countries in IT industry right
now. Our skilled youths are the ones that changing the lifestyles and
viewpoint of our society. While unemployment is hitting youths hard,
outsourcing and freelancing have emerged with the changing outlook on
empowering the youths.
With the consecration of modern web and internet access to the most part of
the country, way of chances and opportunities have grown much. The
government has been motivating people to get more engaged in freelancing
jobs than sitting lethargic and deterioration of time thinking of small number
of opportunities in the ruthless physical job market. Outsourcing in
Bangladesh is becoming another source of incoming foreign remittance.
3.4.1 How Outsourcing work or to Get Works as Freelancers
Nowadays all businesses have crossed beyond a country’s domestic border.
One can select to hire and lend jobs over the geographical boundaries and
flourishing more chances. Outsourcing to distant workers can provide great
benefits for SMEs and also there are many compatible individuals as well as
organizations who can be trustworthy sources to make sure the work’s getting
According to BASIS (Bangladesh Association for Software and Information
Services), there are more than 5.5 lacs freelancers from Bangladesh are
working in through variant freelance marketplaces. These experienced
freelancers are outsourcing their expertise to the whole world and are also
transforming skills they are making a new expectation for Bangladesh to
stand among the other potent tech-skill exporting countries.
There are several freelancing and multitude sourcing marketplace from where
freelancers can easily began working and organizations can find the people
for outsourcing the work. For example, to name a few there is-
1. Freelancer- -who claims to be the
“World’s largest freelancing and crowdsourcing marketplace”.
2. Upwork- – whose tagline is “To connect
businesses with great talent to work without limits.”
3. Toptal- – who claims to connect “The top 3%
of freelance talent all over the world.”
And there are also several freelance marketplaces like the above, where both
freelancers and people who look for outsource their skill can get benefited.
Daily earnings of Bangladeshi freelancers from several marketplaces crosses
10 million BDT per day in total. Internet outsourcing in Bangladesh is thus

holding a bright future.

3.4.2 Works for Outsourcing Companies-
 Software Development;
 Web & Mobile App Development;
 Financial Accounting Outsourcing (FAO);
 Mobile Apps Developments;
 Back office Management;
 Data Entry;
 IT Solutions;
 Mobile/Web Application Maintenance
 Application Modernization Services
 Client Managed Dedicated Development Teams

3.5 Tax Exemption in IT Sector
Bangladesh’s government is giving a lot of subsidiaries, incentives even tax
exemption in the IT industry so that investor and young generation can show
their interest in this sector. According to Finance Act 2019, government has
kept many ways to give incentives or tax exemption if anyone wants to
establish an ICT park or HI-TECH park. The procedure and rate of getting tax
exemption and incentives in establishing ICT and HI-TECH parks are
elaborately described in chapter 8.


Bangladesh is now trying to establish itself as the next rising star in South Asia
for foreign investment. The government has implemented a number of policy
reforms designed to create a more open and competitive climate for private
investment, both foreign and local.
The country has a genuinely democratic system of government and enjoys
political stability seen as a ‘sine qua non’ for ensuring a favorable climate for
investment and sustained development.
Bangladesh has been quick to undertake major restructuring for establishing a
market economy, with the major thrust coming from the private sector. The
country enjoys modest but steady economic growth. Its current development
strategy is based on the premise that the creation and distribution of wealth
occurs through the acceleration of growth driven by competitive market forces,
with the government facilitating growth and making a clean break from the
practices of a controlled economy where private investment is constrained. The
government has been gradually withdrawing its involvement in industrial and
infrastructure sectors and promoting private sector participation.
The government has moved speedily to translate its policy pronouncements
into specific reforms. It has been consistently pursuing an open-door
investment policy and playing a catalytic rather than a regulatory role.
Significant progress has been achieved in reducing non-tariff restrictions on
trade, rationalizing tariff rates and improving export incentives. The
introduction of VAT has helped rationalization of the import tariff and
domestic tax structures. The tariff structure and the import policy are kept
under constant review to identify areas where further improvements are
On the legal and administrative front, the government has initiated measures to
give greater autonomy and independence to the judiciary – a pre-requisite, as
viewed by investors, for the restoration of confidence in the judicial system.
A permanent Law Reform Commission has already been set up to ensure
greater transparency and predictability in the way rules and regulations are
made and implemented.
Foreign investment is particularly welcome in the export-oriented industries
such as textiles, leather goods, electronic products and components, chemicals
and petrochemicals, agro-based industries, green jute pulp, paper, rayon
products, frozen foods (dominated by shrimp farming), tourism, agriculture,
light industries, software and data processing.
Foreign investment is also desired in high-technology products which will help
import substitution or industries which will be labor-, as well as technology

Foreign investment carries enormous significance in a developing country like
Bangladesh. Realizing the importance of foreign investment Bangladesh
formulated its first industrial investment policy in 1973, revised it again in
1974, 1975, and in 1978. Foreign private investment (Promotion and
protection) act, 1980 and the Bangladesh Export Processing zones authority act
1980 were enacted. To make the foreign investment more attractive new
industrial policy was announced in 1982. However, the industrial policy 1999
is by far the most comprehensive document.
From the inception of the independence Bangladesh has been in the center of
economic investment incentive for many countries and institutional bodies of
the world. With the passage of time Bangladesh reform its regulatory structure
in regard to the FDI to open up the new avenue and to dislodge the
compliances related to the FDI. But the effort of this structural progress has
back warded by sudden and unexpected political influence and changes.
Corporations that widely engage in FDI are called multinational companies,
multinational enterprises, or transnational corporations. FDI traditionally
implies export of real capital from home to the host nation, but even when
economic investment results from FDI, capital may not be transferred from the
home nation to the host one. Rather, multinational corporation may
acquire/utilize real capital from local (or a third-nation) sources foreign
capital” means capital invested in Bangladesh in any industrial undertaking by
a citizen of any foreign country or by a company incorporated outside
Bangladesh. In the form of foreign exchange, imported machinery and
equipment, or in such other form as the government may approve for the
purpose of such investment; Bangladesh invites FDI for industrial growth, in
particular welcoming establishment of manufacturing firms and service sector
enterprises that would sell their products within the country and also export
outside it.
4.1 Necessity of FDI for a country like Bangladesh:
FDI is no longer only a strategic option of corporations, it also plays a key role
in the national economic development strategies. Various countries are
attempting to attract foreign investors through a variety of measures, i.e.
liberalization of investment environment, fiscal reforms and a package of
incentive offers. FDI can transform a country’s economic scenario within
shortest possible time. It is not merely access to fund, but also provide transfer
of technical know-how and management expertise. It is also a stabilizing factor
in any economy. Normally the benefits accruable from FDI are inclusive of
(a) Transfer of technology to individual firms and technological spill-over
to the wider economy,

(b) Increased productive efficiency due to competition from multinational
(c) Improvement in the quality of the factors of production including
management in other firms, not just host firm,
(d) Benefits to the balance of payments through inflow of investment funds,
(e) Increase in exports, savings and investment and
(f) Faster growth of employment.
Thus, foreign direct investment is viewed as a major stimulus to economic
growth in developing countries.
4.2  Foreign investment opportunity:
Private investment from overseas sources is welcome in all areas of the
economy with the exemption of five industrial sectors (arms, production of
nuclear energy, forest plantation and mechanized extraction within the bounds
of reserved forests, security printing and minting, air transportation and
railways) reserved for public sector. Such investments can be made either
indecently or through joint venture on mutually beneficial terms and
conditions. In other words, 100% foreign direct investment as well as joint
venture both with local private sponsor and with public sector is allowed.
Foreign investment, however, is specially desired in the following categories:
– Export-oriented industries;
– Industries in the Export Processing Zones;
– High technology products that will be either import-substitute or export-
– Undertaking in which more diversified use of homespun natural resources
is possible;
– Basic industries based mainly only on local raw materials;
– Investment towards improvement of quality and marketing of goods
manufactured and/or
– Increase of production capacities of existing industries; and
– Labour intensive/technology intensive/capital intensive industries.
4.3 Significance of foreign investment in Bangladesh:
Foreign investment carries enormous significance in a developing country like
Bangladesh. Realizing the importance of foreign investment Bangladesh
formulated its first industrial investment policy in 1973, revised it again in

1974, 1975, and in 1978. Foreign private investment (Promotion and
protection) act, 1980 and the Bangladesh Export Processing zones authority act
1980 were enacted. To make the foreign investment more attractive new
industrial policy was announced in 1982. However, the industrial policy 1999
is by far the most comprehensive document. Bangladesh has ever made for
investment including foreign investment.
4.4 The major incentives for foreign direct investment in Bangladesh
 Projection of Foreign investment from nationalization and expropriation
 Abolition of ceiling on investment and equity share-holding by
 Tax holiday between 5 – 10 years power generating companies
 Accelerated depreciation in lieu of tax holiday on certain simple
 Concessionary duty and VAT on capital machinery and spares
 Rationalization of import duties and taxes
 Six-month multiple visa for prospective investors
 Citizenship by investing USD 500000 or transferring USD 1000000
 Permanent relationship by investing USD 75000
 Tax exemption on capital gains under certain simple conditions
 Bonded warehouse and back to back L/C for exporting industries
 Avoidance of double taxation with certain countries
 Facilities for repatriation of capital, profit, royalty, technical fee etc.
 Tax exemption on royalty, technical know-how and expatriates’ salary
 Protection of intellectual property rights
 Taka convertibility in current account
 Treating reinvestment of repatriable dividend as new investment
4.4.1 Foreign Private Investment Opportunities
Investment opportunities include:
 Direct (100%) foreign investment or joint venture investment in the
Export Processing Zones (EPZs) or outside the EPZs (with the exception
of the five industries mentioned above);
 Portfolio investment by purchasing shares in publicly listed companies
through the stock exchange;
 Investment in infrastructure projects such as power generation (a private
power generation policy has been announced), oil, gas and mineral
exploration, telecommunications, ports, roads and highways;

 Outright purchase or purchase of shares of state-owned enterprises,
which are undergoing the process of privatization;
 Investment in private EPZs (a Private EPZ Act was recently passed).
As already stated, foreign investment is particularly welcome in export-
oriented industries and high-technology products or industries which are
labour- as well as technology intensive. The country's drive for foreign
investment is being spearheaded by the Board of Investment, which was
created to facilitate the setting up of manufacturing and other industries in the
private sector, both local and foreign.
4.5  FDI and Bangladesh:
Foreign Direct Investment (FDI) generates economic benefits to the recipient
country through positive impacts on the real economy resulting from physical
capital formation, transfer of technology and increased domestic completion.
Bangladesh stands to gain from these inflows provided it is able to allocate and
manage these resources efficiently keeping in view the concomitant liabilities
of profit and income payments. in the Bangladesh context, the recent surge in
FDI in energy and telecom sectors appear to have heavy import content with
little impact on foreign exchange reserve accumulation. The concern that
logically emerges is whether the real economy would be able to generate
sufficient foreign exchange to finance the remittance of profits and income
originating from the foreign investment. Furthermore, the private sector has
been incurring foreign debt obligation of short, medium, and long-term
maturity to the tune of USD 60-70 million a year. These give rise to interest
and principal payments in foreign exchange over and above the official debt
obligations to bilateral and multilateral agencies.
4.6 Brief FDI history of Bangladesh:
From the inception of the independence Bangladesh has been in the center of
economic investment incentive for many countries and institutional bodies of
the world. With the passage of time Bangladesh reform its regulatory structure
in regard to the FDI to open up the new avenue and to dislodge the
compliances related to the FDI. But the effort of this structural progress has
back warded by sudden and unexpected political influence and changes. The
situation becomes worse one in the September attack on US. During this period
flow of FDI all over the world shrunken at a greater extend. Bangladesh had
also severely affected by that unwanted changes in the world scenario. Before
going for in depth analysis the status of Bangladesh from different aspects are
discussed. Bangladesh could be an attractive place of FDI. It is located
between the growing markets of south Asia.
 Economic Status: The macroeconomic situation of the country is by large,
stable, characterized by a manageable fiscal deficit and low current account

deficit. In external trade, it has steady export growth. Foreign Exchange
reserve is not bad.
 Investment Status: The present democratic government concentrates on
more local & foreign investments in oil, gas, cement, infrastructure, textile
sectors of Bangladesh to face the challenges of the twenty first century.
Though prospects are there in Bangladesh, due to insufficiency of capital &
technology greater investment is no taking place. However, the recent
trends of administrative, banking and infrastructure reform process, low
rate of inflation compared to the neighboring countries (in Pakistan 11.2%,
in India 8.5%, Srilanka 16.7 % and Bangladesh 5%) and separate export
zones are some of the indicators of the countries development process. That
may help in attracting local and foreign investors from developed countries.
Besides, the most important tasks are to revive the rural economy so that the
migration of rural people will come down, because a country like Bangladesh
has poor resources to meet the bargaining demand of the citizens already
settled in the urban areas.
4.7 Foreign Direct Investment Analysis:

2016(US$ million) 2017 (US$ million)
FDI Inflow into Bangladesh 2003.53 2454.81
FDI Outflow from Bangladesh 126.742 15.225
Key Facts:
 The total FDI inflow into Bangladesh increased by 22.52% in 2017.
Nonetheless, Bangladesh remained the third largest recipient of FDI in the
region, after India and the Islamic Republic of Iran
 The total FDI outflow from Bangladesh decreased significantly by 87.99%
in 2017.
 Source: UNCTAD, FDI-TNC-GVC Information System, FDI database
FDI, World Bank, Bangladesh Bank
Country FDI Inflow (US$ million)
Singapore 701.40
United Kingdom (UK) 313.87
United State of America (USA) 208.71
Norway 187.41
South Korea 178.50
Hong Kong 111.70
India 95.41
Netherlands 90.04

China 68.58
Thailand 58.69
Others 440.50
Source: Foreign Direct Investment in Bangladesh, Survey Report,
January-June 2017, Bangladesh.

FDI INFLOWS BY MAJOR SECTORS (fiscal year 2016-17):
Sector FDI Inflow (US$ million)
Telecommunication 593.89
Textiles & Wearing 360.35
Power 334.26
Banking 155.58
Gas & Petroleum 133.67
Others 877.06
4.8 Incentives program:
In order to entice investors, the government has put in place an extensive
programmed of incentives, which include:
 No ceiling on investment
 Tax holidays
 Tax exemption and duty-free importation of capital machinery and spare
parts of 100% for export-oriented industries
 Residency permits for foreign nationals
 Capital, profit and dividend repatriation facilities
 100% foreign equity allowance
 Exemption on income tax for up to three years for expatriate employees
 Term loans and working capital loans from local banks allowed
 Re-investment of repairable dividends treated as new investment
 Double-taxation avoidance, as per bilateral agreements already concluded
 Tax exemption on the interest payable on foreign loans and on royalties and
technical know-how fees
 Open exchange controls
 Multiple-entry visas for foreign investors
 Investors can take advantage of the generalized system of preference, which
allows duty-free access to American, European and Japanese markets
 The taka is convertible for current account transactions.

4.8.1 The country also offers:
 Extremely competitive labor costs, perhaps the lowest in Asia
 An easily trainable workforce of more than 30 million
 A large domestic market, with disposable income growing especially
among the middle class
 A strategic location as the bridge between the South and East-Asian high-
growth regions, as well as links with other markets e.g. India, Pakistan,
Malaysia, Singapore etc.
 Low valued land and minimum energy costs
 Good road/bridge/rail infrastructure, which are being improved, as well as
two sea-ports being further developed
 Legal protection for foreign investment against nationalization and
 Equitable treatment with local investors regarding indemnification,
compensation etc.
4.9 Immigration Procedure:
Business travelers may request visas with a year’s duration and multiple
entries. Bangladesh issues the following categories of business visa:
 Single-entry for three months
 Multiple-entry for three months
 Multiple-entry for six months
 Multiple-entry for one year.
Extensions for each type of visa are also permitted.
4.10 Modified Rules of Landing Permit / Visa on Arrival:
The Government of Bangladesh issued a circular on 18 April 2002 updating
the provisions of the Landing Permit (LP) / Visa on Arrival (VOA) for
travelers without a valid visa. Foreign investors and businesspersons could
avail themselves of the LP/VOA from Shahjalal International Airport for 30
days at most under the following conditions:
The foreign investors shall be identified on the basis of certification from the
AUTHORITY (BIDA))/ BEPZA / Ministry of Industries. Officials from the
will be on duty round-the-clock to facilitate certification of the relevant
documents for VOAs / LPs
 The foreign businesspersons who are directly associated with import of
Bangladeshi products shall be identified on the basis of the certificate by the
relevant associations of export-oriented commercial/industrial organizations

or the Federation of Bangladesh Chamber of Commerce and Industries
(FBCCI) or the Bangladesh Garments Manufacturing and Exporting
Association (BGMEA). The certificate shall include the Tax Identification
Number (TIN) of the respective local commercial/industrial organizations.

The conditions of issuing LP/VOAs include the following:
(a) In no circumstances shall the period of the LP/VOA be extended
(b) The LP/VOA applicant shall have endorsement of USD 500 in their passport
/ in cash
(c) The LP/VOA Fee will be determined by the Reciprocity Policy with
respective countries
(d) The applicant shall have a return air ticket
(e) The applicant shall utilize the same port for entry and departure.
Applicants should contact the Bangladesh mission in their own country.
All sectors of industry (except six) are open for private investment.
The six sectors reserved for public investment only are:
 Defense and defense production
 Nuclear energy
 Extraction from reserved forests
 Security printing and mint
 Air transportation (some domestic routes and international air cargo have
already opened for private investment)
 Railways.


5.1 Type of Organization
Implementing a wholly owned or joint venture industrial project in Bangladesh
is a fairly simple process. Before going through the process of set up a business
firstly elaborate the type of organization:
Types of Organization Acts Authority Remar

1 Company Govt.
The Company Act, 1994

Register of
Joint Stock
and Firms
Securities &

Charted Company
Statutory Company

Unlimited Company

By shares
Limited by

2 Trade Organizations The Trade Organizations
Ordinance, 1961 &
Companies Act, !994

Ministry of

3 Society The Societies
Act,1860 and Guideline
of Social Welfare Forum

Somaj Seba

4 Trust The trust act,1882 and


5 Partnership Firm Partnership Act 1932 RJSCB &
6 Foundations The companies Act,1994
& The societies
registration act,1860

7 Club The societies registration
Act,1860 & The trade
Ordinance 1961

Ministry of
& NSI &
8 Corporation The companies Act,1994
& Special Act of


9 Branch Office The companies Act,1994
& BIDA Guideline

10 Liaison Office The companies Act,1994
& BIDA Guideline

11 NGO NGO Bureau Guideline Somaj Seba

12 PPE The companies Act,1994
& Special Act of

13 Proprietorship Start with Trade License Different
As set up a company fairly difficult and also most of the business organization
are incorporating as company that is why the entire process of a company is
presented in the following section.
5.2 Introduction for setup a company:

We need to take registration from the Register of Joint Stock Companies and
Firms (RJSC) when we form a company. We think Bangladesh is a suitable
place to form a new business and to get more profit. We generate an idea and
form a business then we have to register our business from RJSC. RJSC is the
only authority to approve registration certificate of incorporation certificate of a
company in the country.
After collecting name clearance certificate to prepare Company’s
Memorandum of Association and Articles of Association by following
Company Act 1994. Memorandum of Association describes all kind of
business activities and services where company can perform and mentioning
number of shares of every Director, Chairman, Managing Director and
Shareholders. Articles of Association expresses all kinks of internal activity as
like material work, office stuff’s duty, official manner and so on. Also
mentioning here number of occupying shares of each Director, Chairman,
Managing Director & Shareholder’s and qualifying share of Directorship
written down authorized capital and paid up capital of the Company.
5.3 Company Definition:
A company is an association or collection of individuals, whether natural
persons, legal persons, or a mixture of both. Company members share a
common purpose and unite in order to focus their various talents and organize
their collectively available skills or resources to achieve specific, declared
The Companies Act, 1956, states that 'company' includes company formed and
registered under the Act or an existing company i.e. a company formed or
registered under any of the previous company laws. However, company is not a
citizen so as to claim fundamental rights granted to citizens.
5.4 Essential Features of company:
5.4.1 Registration:
A company comes into existence only after registration under the Companies
Act. But a Statutory Corporation is formed and commence business as notified
or stated in the Act and as passed in Legislature. In case of partnership,
registration is not compulsory.
5.4.2 Voluntary Association:
A company is an association of many persons on a voluntary basis. Therefore, a
company is formed by the choice and consent of the members.
5.4.3 Legal Personality:
A company is regarded by law as a single person. It has a legal personality.
This rule applies even in the case of “One-man Company.”

5.4.4 Contractual Capacity:
A shareholder of a company, in its individual capacity, cannot bind the
company in any way. The shareholder of a company can enters into contract
with the company and can be an employee of the company.
5.4.5 Management:
A company is managed by the Board of Directors, whole time Directors,
Managing Directors or Manager. These persons are selected in the manner
provided by the Act and the Articles of Association of the company. A
shareholder, as such, cannot participate in the management.
5.4.6 Capital: A company must have a capital, otherwise it cannot work.
5.4.7 Permanent Existence:
The Company has perpetual succession. The death or insolvency of a
shareholder does not affect its existence. A company comes into end only when
it is liquidated according to provision of the Companies Act.
5.4.8 Registered Office: A company must have a registered office.
5.4.9 Common Seal:
A company must have a Common Seal. The company being an artificial person
cannot sign its name on a contract. The common seal is used as a substitute for
its signature. The common seal bears the name and place of the company, and
date of its incorporation engraved on it.
5.4.10 Limited Liability:
The liabilities of shareholder of a company are usually limited. The creditors of
a company are not creditors of individual shareholders and a decree obtained
against a company cannot be executed against any shareholders. It can only be
executed against the assets of the company.
5.4.11 Transferability:
The shareholder of a company can transfers its share and ordinarily the
transferee becomes a member of the company.
5.4.12 Statutory Obligations:
A company is required to comply with various statutory obligations regarding
management, e.g., filing balance sheets, maintaining proper account books and
registers etc.
5.4.13 Not a Citizen:
A company is an artificial person, not a natural person. Therefore, a company is
not a citizen, although it may have a Domicile

5.4.14 Residence:
A company has a residence (for taxation and other purpose). A company does
not possess any fundamental rights.
5.4.15 Social Objective:
The present view as regard the legal nature of Company Law is that the
Company is a social institution having duties and responsibilities toward the
community, its workers, the national economy and progress.
5.4.16 Centrally Administrated:
The administration of company Law is entrusted to the Central Government.
As a company’s rules and regulation company has two types like,
1. Public Limited Company
2. Private Limited Company.
We want to form a Private Limited Company. Under the Section 3(1) (iii)
defines a private company as one which: –
 has a minimum paid-up share capital of Rs.1 Lakh or such higher capital as
may be prescribed; and
 by its Articles Association
 limits the number of its members to 50 which will not include: –
A. members who are employees of the company; and
B. members who are ex-employees of the company and were members while
in such employment and who have continued to be members after ceasing
to be employees;
5.5 Registering Private limited company in Bangladesh:
To register a company manually, one has to go to RJSC office and fill the
application form. One can also register through website of the office of the
Registrar of Joint Stock Companies and Firms (RJSC). The web address is
5.6 Steps of forming a company in Bangladesh

Name Clearance


Return Filling

Winding Up

Issuance of
Certified Copies
Struck off

5.7 Name clearance:
RJSC name clearance is the very first stapes for a company formation or
registration to start business in Bangladesh. RJSC (The Registrar of Joint stock
Companies and Firms) is the only legal authority and regulatory body to issue
Name Clearance Certificate.
5.8 Name Clearance Terms and Condition:
1. The same name is not applicable for Company / formation in Bangladesh,
(Which is certified by RJSC). Its hearing sound, written style and sight will
not be same all the way.
2. Name could not be similar with international company, organization, social
& Cultural organization.
3. Name cannot be permissible any existing company, business body, Social,
Cultural, Entertainment & Sporting organization’s name.
4. Company’s name will not be similar Govt. Organization or Company.
5. Nationally fame person’s name or famous family’s name need to permission
from particular person and take permission to Government.
6. If you interested to take freedom fighter related name for your company
must be essential approval of Freedom Fighter Ministry of Bangladesh.
7. Company’s name could not be similar of Govt. development program or
development organization.
8. No name will applicable of political party’s slogan, political party’s name
and program which are existing now.
9. Slang word, Rebuke or……possible for company formation in Bangladesh.
10. Cannot select any name which is broken Social, Religious and national

11. Earlier established (at least 10 years old) Social organization’s real name, to
attend personally with organizing Committee resolution for registration of
social organization’s real name.
12. Social, cultural & sporting Organizations can be limited company by taking
Ministry permission otherwise not possible to do.
13. Violating any name clearance terms & conditions R, RJSC can change
providing name and if name is unchanged a certain time, Registration
number will be acquainted of the company.
14. Only name clearance is not final settlement of Company
Registration/Formation first stapes.
At first you select a name of your company than submit RJSC and pay 600 (Six
Hundred) taka to schedule authorized bank of name clearance cost. If you get
name clearance from RJSC of submitting company’s name, and make
Memorandum of Association & Article of Association.
5.9 Registration
5.9.1 Memorandum of Association:
Memorandum of Association describes all kinds of business & activities which
will be operate by the company and mentioned of shares distribution of every
Director and shareholders. All share holder, director, managing director,
Chairman signed it for their proposed share.
5.9.2 Articles of Association:
Article of Association basically written down legal and administrative activities
of the company, as like borrowing powers, power of chairman, managing
director, director and shareholders, general meeting procedure, quorum of
meeting, vote of member’s, qualification shares of directors, quorum of board
meetings, number of share of directors and shareholders and all other operating
activities which followed by Company Act 1994.
5.9.3 Submission and Payment
After Preparation Memorandum of Association & Article of Association and all
relevant documents and getting signature from prospected director and
shareholder and submitted to for formation and finally
Click the print icon(s) under the Print Preview to preview the documents
submitted online. Make sure data is correct, to submit them and pay the
application fee at BRAC Bank or EBL Or One bank.
Click the Continue button and you will see the Submission and Payment
Reference page

 Congratulations! You have successfully completed the online submission of
Registration Application.
 Please retain this submission reference for future reference.
 You can Edit your submission (if you so decide) prior to submission
 Click Back to Home to go the home page.
5.10 Return Filling:
a. Registered entities are to file to RJSC documents pertinent to management /operation of
the respective entity in prescribed Forms and Schedules (called Returns Filing).
b. There are two (2) types of Returns Filing, viz., a) Annual Returns Filing and b) Returns
Filing for any change in an entity
c. Entities submit returns for filing at RJSC.
d. Entities pay filing fee and late filing fee (if applicable) to RJSC counter
e. RJSC scrutinizes returns.
f. In case of any incomplete/incorrect submission, RJSC notifies the entity for remedial
g. RJSC archives approved returns.
Returns to be Submitted
PRIVATE COMPANY (Companies Act, 1994)
Private companies are to submit the following returns for filing.
a. Annual Returns
i. Schedule X – Annual summary of share capital and list of shareholders,

Directors: to be filed within 21 days of AGM [Section 36].
ii. Balance Sheet: to be filed within 30 days of AGM
iii. Profit & Loss Account: to be filed within 30 days of AGM
iv. Form 23B Notice by Auditor: to be filed within 30 days of receiving

appointment information from the company
[Section 210 (2)].
b. Returns for Change
i. Filled in Form III – Notice of consolidation, division, subdivision or
conversion into stock of shares: to be filed within 15 days of consolidation
and division etc. [Section 53 & 54].

ii. Filled in Form IV – Notice of increase share capital: to be filed within 15

days of increase of share capital/member [Section 56].

iii. Filled in Form VI – Notice of situation of Registered Office and of any
change therein: to be filed within 28 days of establishment or change
[Section 77].

iv. Filled in Form VIII – Special Resolution/ Extraordinary Resolution
including name change, conversion into public company, alteration of the
memorandum of association, alteration of articles of association etc : to be
filed within 15 days of the meeting [Section 88 (1)].

v. Filled in Form IX – Consent of Director to act: to be filed within 30 days of

appointment [Section 92].

vi. Filled in Form XII – Particulars of the Directors, Manager and Managing
Agents and of any change therein: to be filed within 14 days from the date
of appointment or change [Section 115].

vii. Filled in Form XV – Return of allotment: to be filed within 60 days of

allotment [Section 151].

viii. Filled in Form XVIII – Particulars of mortgages or charges: to be filed
within 21 days of creation of the mortgage or charge [Section 159 & 391].
ix. Filled in Form XIX – Particulars of Modification of Mortgage or Charge: to
be filed within 21 days of the date modification [Section 167(3) & 319].
x. Filled in Form XXVIII – Memorandum of satisfaction of mortgage charge:
to be filed within 21 days of the date satisfaction [Section 12 & 391].

xi. Filled in Form 117 – Instrument of Transfer of Shares.
xii. Digital copy of original Memorandum & Articles of Association
5.11 Winding Up:
1. Mode of Winding Up
The Winding up of a company may be either
i. By the court; or
ii. Voluntary
a. Sub-Divisions of Voluntary Winding Up
i. Members Voluntary Winding Up: wherein a declaration of solvency to pay debts

is made

ii. Creditors Voluntary Winding Up: wherein a declaration of solvency is not made
iii. Subject to supervision of court: wherein a company has resolved to wind up
voluntarily and the court makes an order on consideration of a petition by the
member (s) or the creditor (s) that the Voluntary Winding up shall continue but
subject to supervision of the court

2. Winding Up by the Court
i. The Company or any creditor or creditors or the Registrar submits petition to the

court for Winding up of the company by the court.

ii. Winding up of a company by the court is deemed to commence at the time of

presentation of the petition for the Winding Up.

iii. The petitioner/the company files with the Registrar a copy of the Court order within

thirty (30) days of the court order.

iv. The Registrar notifies in the official gazette that such a court order has been made.
v. The court may, at any time after an order for Winding up, in consideration of an
application of any creditor or contributor, make an order staying the Winding up
proceedings either altogether or for limited time.

vi. The court may appoint other than the official receiver a person or persons as official
liquidator or liquidators for the purpose of conducting the proceedings of winding
vii. The official liquidator files with the Registrar audited accounts.
viii. When the affairs of the company are completely wound up the official liquidator
files with the Registrar court order of dissolution within fifteen (15) days of such an

3. Voluntary Winding Up
i. A company may adopt resolution, special resolution or extraordinary resolution for

Voluntary Winding up.

ii. A Voluntary Winding up is deemed to commence at the time of passing of the


iii. The company within ten (10) days of resolution notifies in the official gazette and in

newspaper that such a resolution has been taken.

iv. Members Voluntary Winding up: In this case, prior to passing of the resolution of
Voluntary Winding up, the directors at a meeting make a declaration of solvency that
the company is capable to pay its debts within a period not exceeding three (3) years.

The declaration is filed with the Registrar.

v. Creditors Voluntary Winding up: In this case, a declaration to pay debts is not made.
vi. The company shall appoint one or more liquidators.
vii. As soon as the affairs of the company are fully wound up and final meeting held, the
liquidator within one (1) week of the meeting files with the Registrar final accounts
and returns of the final meeting.

viii. The company shall be deemed to be dissolved on expiration of three (3) months of

registration of returns of the final meeting.

ix. The dissolution period may however be extended by the court on consideration of

any petition.

x. Winding up subject to supervision of court: At any stage of the Voluntary Winding
up process, the court may make an order, on consideration of a petition by the
member (s) or the creditor (s), that the Voluntary Winding up shall continue but
subject to supervision of the court.
5.12 Issuance of Certified Copies:
a. RJSC is the sole authority that keeps records of all registered entities (companies, trade
organizations, societies and partnership firms).
b. Anyone can apply for certified copy of any of such records of an entity
c. However, the profit & loss account of a company is not open to all. Only authorized
personnel of the respective company can apply for it.
d. On receipt of an application and requisite fee, RJSC issues certified copy of the records
applied for.
Documents Constituting an Issuance of Certified Copies Application
i.  One applies for certified copy of record (s) through website

Documents for which certified copies are issued
PRIVATE COMPANY (Companies Act, 1994)
a. Identified by unique nature
i. Articles of Association or part thereof
ii. Memorandum of Association or part thereof
iii. Certificate of incorporation
iv. Declaration on registration of company
v.  List of persons consenting to be directors (1st Directors)
b. Identified by the applicable year
i. Annual summary of share capital and list of shareholders, Directors

ii. Balance Sheet

iii. Profit & Loss Account (only to the authorized person of the respective

iv. Notice by Auditor
c. Identified by the effective date
i. Notice of consolidation, division, subdivision or conversion into stock

of shares

ii. Notice of increase of share capital
iii. Notice of situation of registered office and of any change therein
iv. Special Resolution/Extraordinary Resolution
v. Consent of director to act
vi. Particulars of the Directors, Manager and Managing Agents and of

any change therein
vii. Return of allotment
viii. Particulars of mortgage or charges

ix. Particulars of modification of mortgage or charge
x. Memorandum of satisfaction of mortgage charge
xi. Instrument of Transfer of Share
xii. Alteration of Memorandum of Association
xiii. Alteration of Articles of Association
xiv. Name change
xv. Conversion of private company into public company
xvi. Certificate of Registration of mortgage or charge
xvii. Certificate of Registration of modification of mortgage or charge
xviii. Certificate of Registration of satisfaction of mortgage or charge
xix. Struck off certificate
xx. Wound up certificate
5.13 Struck Off:

i. Where the Registrar has reasonable cause (like annual returns are not submitted for a long
period etc.) to believe that a company is not carrying on business or in operation, sends to
the company a notice (1 st notice) inquiring whether the company is carrying on business or in
ii. If the Registrar does not within thirty (30) days of sending the notice receive any answer
thereto, shall within fourteen (14) days, after the expiration of the said thirty (30) days send
to the company a 2 nd notice stating that if an answer is not received to the 2 nd notice within
thirty (30) days from the date thereof, a notice will be published in the official Gazette with a
view to striking the name of the company off the register.
iii. If the Registrar either receives an answer from the company to the effect that it is not
carrying on business or in operation, or does not within thirty (30) days after sending the 2 nd
notice receive any answer, he may publish in the Official Gazette, and send to the company a
notice that, at the expiration of ninety (90) days from the date of that notice, the name of the
company mentioned therein will, unless cause is shown to the contrary, be struck off the
register and the company will be dissolved, and
iv. In such a case the Registrar may send a copy of the notice to the company while sending it
to the concerned authority for its publication in official Gazette.

5.14 Post-registration tasks for different nature of business (Business
Sector Wise):
Depending on the type of your newly registered joint venture, there are some
additional licenses and procedures you need to follow:

5.14.1 Common Licenses & Permission:
 Collect Trade License
 Obtain Taxpayer’s Identification Number (TIN) Certificate
 Regularize Bank Account for the newly registered Joint Venture Company
 Obtain VAT Certificate or BIN Registration (Business Identification

5.14.2 Commercial Purpose Licenses & Permission:
 Import Registration Certificate (In case of Import Business)
 Export Registration Certificate (In case of Export Business)
 Trade Association (TO) Membership
5.14.3 Manufacturing Purpose Licenses & Permission:
 Bangladesh Investment Development Authority (BIDA)
 Land or Floor Lease from Bangladesh Hi-Tec Park Authority
 Factory Licenses
 Fire Licenses
 Environment Licenses
 Drug Licenses
 Bangladesh Hi- Tech Park Authority
 Industrial Import Registration Certificate
 Industrial Export Registration Certificate

6 . Tips on Rules and regulations applicable to Liaison
Office of a foreign company in Bangladesh:

Flow Chart for setting up of Liaison Office of a Foreign Company in
Bangladesh will be as under:

A: Permission from BIDA:
The Bangladesh Investment Development Authority (BIDA) governs the
permission of Liaison office and the application should be made in prescribed
form and should be accompanied by some specified documents.
Meeting of the committee of Bangladesh Investment Development Authority
(BIDA) usually held twice in a month. The Decision of the meeting usually
communicated after ten days of holding of the meeting. Ideal time schedule for
obtaining the permission of BIDA could be 45 days which may vary both ways
depending on the practical circumstances.
The initial permission of BIDA is granted for a limited period with in the range
of one year to five year, however extension of such permission is usually

Attestation of documents by
Bangladesh High Commission
Application to BIDA for LO

Approval of BIDA

A: Permission from BIDA:
The Bangladesh Investment Development Authority (BIDA) governs the
permission of Liaison office and the application should be made in prescribed
form and should be accompanied by some specified documents.
Meeting of the committee of Bangladesh Investment Development Authority
(BIDA) usually held twice in a month. The Decision of the meeting usually
communicated after ten days of holding of the meeting. Ideal time schedule for
obtaining the permission of BIDA could be 45 days which may vary both ways
depending on the practical circumstances.
The initial permission of BIDA is granted for a limited period with in the range
of one year to five year, however extension of such permission is usually

Attestation of documents by
Bangladesh High Commission
Application to BIDA for LO

Approval of BIDA

Bank A/c Opening

Application to Bangladesh Bank


Bangladesh Bank Permission
TIN certificate

In case of renewal of permission of BIDA, the Tax clearance Certificate is
required and the application should be made two months before expiry of
the permission.
B: Initial address:
Ideally, before obtaining the permission of BIDA the Liaison may not enter
into any lease agreement for office premises, in which case MOU for the rental
could be preferred instead of lease agreement. The address of C.A or lawyer of
the company may be used as the official address of the company for the time
being. On having the legal set up the address may be changed with proper
notifications to the respective authorities.
C: Initial Inward Remittance:
BIDA approval will be made subject to initial inward remittance of USD
50,000 towards setting up and operational cost of the liaison office for the
initial period. Such remittance should be made within 2 months of the
permission. Utilization of the fund will be at the discretion of the company.
D: Opening of Bank Account:
The Liaison office shall have to open an account with any schedule Bank of
Bangladesh for receipt of remittance to meet its operational cost. The required
documents which are needed for opening the bank account are as under:
 Copy of Permission of BIDA;
 Copy of Memorandum and Articles of Association of the company;
 Board resolution for opening a Bank Account of the name of Company in
 Board resolution for authorization to operate bank account in Bangladesh;
 Copy of passport of the foreign national, who will operate the bank account
on behalf of the company;
 Three copy Photographs of the foreign national who will operate the Bank
 Work Permit of the foreign national; and
 Prescribes form for opening a bank account issued by respective bank.
If the account is operated by any local employee then copy of passport and
work permit of foreign national will not be required.

E: Bangladesh Bank (Central Bank) Permission

After having the permission of BIDA, the Liaison office will be required to
register with Bangladesh Bank (Central Bank) u/s 18B of the Foreign Exchange
Regulation Act 1947 ((FERA). The application should be made through
Authorized Dealer Bank
In case of renewal of permission of Bangladesh Bank, the Tax clearance
Certificate is required.
F: Setting up Completion Program:
Standard time schedule for setting up of the liaison office are as under:
Activity Weeks

1 2 3 4 5 6 7 8 9

TIN Certificate
S. clearance
Bank Account
The above schedule is ideal one, which may be varied to some extent (both
way) based on the practical circumstances.
G: Security Clearance:
The liaison office shall have to obtain security clearance from the Ministry of
Home, Govt. of Bangladesh. The clearance will be granted following
investigation by SB of police and NSI.
H: Area of activity and opportunity for the Liaison office:
Liaison office is prohibited to enter into business dealings directly but it can
explore the business opportunity, Quality control, Information
transmission & correspondences. Such liaison office has to confine its
activity for which it got the permission from the Board of Investment.

I: Repatriation:

 Outward remittance of any kind from Bangladeshi source is prohibited.
 Unspent inward remittance can be remitted at the closure subject to
approval of Central Bank and having the tax clearance certificate.
 Expatriate can make remittance of 50% of his salary upfront and the
residue after paying tax can be repatriate at the time of Exit.
J: Filing of Quarterly statement to Bangladesh Bank etc.
After getting the permission the Liaison office will require to file with
the Quarterly statement of accounts for the inward remittance and its
disbursement to Bangladesh Bank in Prescribed form along with the
encashment certificates within 30 days from the end of each quarter,
copy of that should also be filed with the Board of Investment and
Income tax authority.
K: Sources of Fund:
 All operational, functional and establishment cost of the LO should be met
on receipt of remittance from abroad.
 Receipt of any amount from local source is strictly prohibited.
L: Taxation
1. General:
Imposition of income tax on Liaison office is guided by the Income Tax
Ordinance –1984 and the Double taxation treaty between the GOB of
Bangladesh and respective country.
Assessment of Liaison office is covered by Rule 34 of the Income Tax Rule-
1984 and Section 18 of the Income Tax Ordinance 1984. Assessment of an
assessee is based on the residential status of the assessee and personal status of
the assessee. Usually Liaison offices are assessed with nil income.
2: Residential Status:
 A Company shall be treated as resident if the control and management
affairs are situated wholly in Bangladesh. Liaison Office is treated as non-
resident and company.
 An Individual shall be treated as resident
 if he has been in Bangladesh for a period or periods of 182 days or more in
Bangladesh during the income year; or
 If he has been in Bangladesh for period of ninety days or more during the
income year and total 365 days in preceding four years.

A person who is not a resident shall be treated as non-resident.
3: Scope of Total Income chargeable to tax:
 In case of resident: World income.
 In case of non-resident: Income deemed to accrue or arise in Bangladesh
4: Assessment:
 Every Liaison office in Bangladesh shall be assessed to tax for every year
and may be taxed if there are any income accrue or arise in Bangladesh u/s
18(2) of the Income Tax (IT) Ordinance 1984.
 Referring to the PE under DTA with respective country and subject to
fulfillment of certain terms and conditions liaison office may be assessed
with nil income.
M: Registration with Value Added Tax Authority:
 Liaison office are not required to registered with VAT authority but
provisions of withholding VAT is applicable such office.
N: Trade License:
 As the liaison office will not be involved in any trade hence obtaining of
Trade License is not applicable for the liaison office.
O: Application of Labour Law:
Labour law 2006 shall be applied and important features are as under:
 Every worker shall be allowed one and half day’s consecutive holiday in
each week.
 Shops and Establishment shall be closed for at least one and half
consecutive days in each week.
 Festival holiday with full wages 10 days.
 Casual Leave with full wages for 10 days.
 Sick leave –14 days.
 Maintenance of Attendance register, Pay Register, Leave Register,

P: Service Rule:
There is no mandatory provision for adoption of any service rule. Adoption of
service rule will stand for good practice and standard corporate policy.

However, Labor laws will be applied for the workers only and as for officer
and executives there are no legal bindings for the employers.
Q. Registration with Bangladesh Bank:
Foreigner’s working in any company incorporated outside Bangladesh shall require
registration with Central Bank under Section 18A of Foreign Exchange Regulation Act 1947
R: Ratio of Employment:
There should be at least five local employments against employment of one
foreign national in the Liaison


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