Frequently Asked Questions raised by potential foreign investors in Bangladesh.
- What are the various structural options that a foreign investor can choose to set up a business in Bangladesh?
A foreign investor may a) open a branch or liaison office; or b) incorporate a company in Bangladesh.
- Are foreign investors allowed to own 100% of a business?
Yes, 100% foreign ownership of a business is allowed in Bangladesh.
- Is there any specific sector where foreign investment is restricted?
Yes, private investment, local as well as foreign, is restricted in four sectors on strategic grounds as mentioned in the Industrial Policy 2010. Those four sectors are:
- Arms and ammunitions and other military equipment and machinery
- Nuclear power
- Security printing and minting
- Forestation and mechanized extraction within the boundary of reserved forest
- Are there other sectors that require prior approval for setting up industries?
Yes, there are 17 controlled sectors which require prior clearance/ permission from the respective line ministries/authorities. These are:
- Fishing in the deep sea
- Bank/financial institution in the private sector
- Insurance company in the private sector
- Generation, supply and distribution of power in the private sector
- Exploration, extraction and supply of natural gas/oil
- Exploration, extraction and supply of coal
- Exploration, extraction and supply of other mineral resources
- Large-scale infrastructure project (e.g. flyover, elevated expressway, monorail, economic zone, inland container depot/container freight station)
- Crude oil refinery (recycling/refining of lube oil used as fuel)
- Medium and large industry using natural gas/condescend and other minerals as raw material
- Telecommunication service (mobile/cellular and land phone)
- Satellite channel
- Cargo/passenger aviation
- Sea-bound ship transport
- Sea-port/deep sea-port
- VOIP/IP telephone
- Industries using heavy minerals accumulated from sea beach
- Is BOI approval/registration mandatory for commercial enterprises?
For locally incorporated company, BOI’s approval/registration is not mandatory. However without BOI’s approval/registration, obtaining work permit, some other permits/licenses, plot in specialise economic zone, etc. might prove difficult.
For branch office/liaison office, prior BOI approval is mandatory.
- Is there any Tax holiday?
Yes, tax holiday facilities are available for 5 or 7 years depending on the location of the industrial enterprise. For industrial enterprises located in Dhaka and Chittagong Divisions (excluding Hill Tract districts of Chittagong Division) the tax holiday facility is for 5 years while it is 7 years for locations in Khulna, Sylhet, Barisal, and Rajshahi, Divisions and the 3 Chittagong hill districts.
Tax holiday facilities are provided in accordance with existing laws. The period of tax holiday is calculated from the month of commencement of commercial production. Tax holiday certificate is issued by National Board of Revenue (NBR) for the total period within 90 days of submission of application.
- Is there any Tax exemption allowed?
Tax exemptions are allowed in the following cases:
- on royalties, technical know-how fees received by any foreign collaborator, firm, company and expert.
- income tax up to 3 years for foreign technicians employed in industries specified in the relevant schedule of the income tax ordinance.
- on income of the private sector power generation company for 15 years from the date of commercial production.
- on capital gains from the transfer of shares of public limited companies listed with a stock exchange.
- on the interest on foreign loans under certain conditions.
- Are foreign investors allowed to borrow from local banks?
Yes, foreign investors may obtain full working loans from local banks. The terms of such loans will be determined on the basis of bank-client relationship.
- Are foreign investors allowed to repatriate their investment?
Full repatriation of capital invested from foreign sources is allowed. Similarly, profits and dividend accruing to foreign investment may be transferred in full. If foreign investors reinvest their repatriable dividends and or retained earnings, those will be treated as new investment.
- Are foreign investors allowed to bring foreign workers?
Yes, foreign investors are allowed to bring foreign workers. Work permit is required for such workers.
- What kind of legal protection available for foreign investment?
The Foreign Private Investment (Promotion &Protection) Act, 1980 ensures legal protection to foreign investment in Bangladesh against nationalisation and expropriation. It also guarantees non-discriminatory treatment between foreign and local investment, and repatriation of proceeds from sales of shares and profit.