Rahman Rahman Huq Chartered Accountants
9 Mohakhali C/A (11th & 12th Floors)
Tel: +880 (2) 988 6450-2
Country business landscape
Bangladesh is a country of about 160 million people, a significant percentage of that being under the age of 35. For well over a decade the country has been growing at the rate of about 6% per year (over 7% recently). Bangladesh is the second largest exporter of Ready-made garments (RMG) in the world, contributing about 80% of export earnings for the country. This is leveraged on a sizable pool of inexpensive, skilled and disciplined workforce.
Other sectors showing significant promise, whether for a growing local market or export, are pharmaceuticals, leather goods and IT services. In the public sector, government has undertaken large infrastructure projects in the areas of power generation and distribution, road and rail transport, ports, LNG terminals etc. many of these have loan or grant funding from Japan, China, Russia, India, along with multilateral agencies.
All of the above have spurred consumption driven economy with retail, FMCG, entertainment, telecommunication etc. being immediate beneficiaries, thus creating additional opportunities for investment.
Entry into and operations in Bangladesh
International investors can set up incorporated companies or branches in Bangladesh. Other than few restricted sectors, 100% foreign ownership is permitted. Company incorporation can be done in a week; a branch can take about a month. There is no restriction on repatriation of dividends.
The general corporate tax rate is 35%; banks and telecom companies are subject to higher rates. Exporters enjoy 50% exemption from tax. Certain sectors, for example IT Enabled Services (ITES), enjoy 100% exemption. Annual income tax returns must be filed by all businesses.
The major indirect tax is Value Added Tax (VAT), the standard rate of which is 15%. Bangladesh has had VAT since 1991. VAT Act 2012 is expected to be made effective from July 2019. This new act is closely aligned to VAT regimes in developed jurisdictions like EU.
Work permit for highly skilled foreign workers is easily obtained, as are required work visas. The rules for repatriation of expatriate earnings are clear and relatively simple.
The general financial reporting framework is Bangladesh is Bangladesh Financial Reporting Standards (BFRS) and Companies Act 1994. BFRS is totally aligned to International Financial Reporting Standards (IFRS).