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Bangladesh actively pursues foreign investment, especially in the garment, energy, oil and gas, and infrastructure industries. It provides a variety of investment incentives in accordance with its industrial policy and export-oriented economic strategy, with few formal distinctions between domestic and foreign private investors.

Foreign and local private entities are able to establish, own, run, and sell stakes in the majority of business businesses. However, four industries are allocated for government investment:

Arms and ammunition, as well as other defense-related equipment and apparatus; forest plantation and mechanized extraction within the boundaries of protected forests; nuclear energy production

The Bangladesh Investment Development Authority (BIDA) is primarily responsible for encouraging, overseeing, and promoting private investment. Bangladesh Export Processing Zone and Bangladesh Economic Zone Authority are likewise vested with the same functions and authorities inside their respective Export Processing Zone and Economic Zone, in addition to BIDA.

For foreign direct investment, there are no restrictions on foreign equity involvement, and with the exception of a few sectors, foreign equity participation of 100 percent is permitted.

The privilege to issue and transfer shares

If the entrepreneurs utilize their own capital, no license from the Bangladesh bank is required to launch such businesses. The Bangladesh Bank does not require prior approval for the issuance of shares to non-residents in exchange for foreign investment in Bangladesh. Shares may be issued in exchange for freely convertible foreign currency imported through the banking system, import of capital machinery, or a combination of both. Foreign exchange so brought in must be exchanged for taka prior to the issuing of shares, with the exception of Type A (totally foreign owned) and Type B (Joint Venture) units of EPZs and EZs, where equity in FC earned abroad may be held in FC accounts of the units in question.

The Bangladesh Bank would not need to approve the transfer of Bangladeshi shares and securities from one shareholder to another shareholder regardless of their nationality or residence. In the event of a transfer of shares in a private/public (non-listed) company between a resident and a non-resident, or vice versa, Bangladesh Bank must be notified via an Authorized Bank within fourteen days of the transaction.

For the repatriation of the proceeds from the sale of non-residents’ equity investments in a private or public limited company, Bangladesh Bank’s prior clearance is required (not listed). Due to the absence of a recognized market price for such investments, Bangladesh Bank will accept the fair value of the shares as of the date of sale based on an appropriate combination of three valuation methodologies (NAV; TRRV; and DCF), depending on the nature of the firm.

Complete repatriation of Dividends, Investment Income, and Other Income

The total return of capital invested with liberating sources will be permitted. Profits and dividends derived from foreign investment can also be transferred in full. If foreign investors reinvest their recoverable dividends and/or retained earnings, the reinvestment will be considered a fresh investment. Foreigners employed in Bangladesh are permitted to remit up to fifty percent of their pay and will have access to facilities for the complete repatriation of their savings and retirement benefits.

Bangladesh’s Foreign Investment Protection Legislation

Through the Foreign Private Investment Act of 1980, which guarantees the repatriation of money and dividends for foreign investors, the government guarantees protection against nationalization and expropriation. Additionally, Bangladesh has enacted necessary legal protections for intellectual property rights.

In addition to the Foreign Private Investment Act of 1980, the government has enacted an FDI Policy (Foreign Direct Investment Policy) that promotes a simple yet effective investment system in Bangladesh. The program simplifies the procedure of leasing and purchasing private land, incorporating a firm, enabling a corporate tax vacation for seven years (15 years in the power industry), and implementing an exemption of income tax for foreign employees for up to three years in certain circumstances.

Visa, Employment Permit, Citizenship

Visas for one-month to five-year durations are available to prospective international investors. BIDA/BEZA/BEPZA issues employment permits to foreign nationals. The number of expatriate personnel in an industrial enterprise cannot exceed a ratio of 1:20 (foreign: domestic) for industrial settings and 1:5 (foreign: domestic) for commercial enterprises. Citizenship is attainable with a USD 1 million investment or a USD 2 million fixed deposit in a scheduled bank. Additionally, it is feasible to acquire NO Visa Requirement for Investors for investments above 10 million US dollars.

Dispute Settlements-

The Arbitration Act of 2001 allows for alternative dispute settlement in times of conflict. Bangladesh has ratified the Convention on the International Recognition and Enforcement of Foreign Arbitral Awards. Bangladesh is also a member of the International Centre for the Settlement of Investment Disputes (ICSID) (ICSID). In addition, the current legal framework permits the execution of foreign arbitral rulings with little obstacles. Bangladesh gives investors a stable and resourceful environment suited for the development or expansion of any firm, and it can be concluded after much deliberation that Bangladesh is really a “dream investment destination.” [1]

Elimination of Dual Taxation

Bangladesh has inked Avoidance of Double Taxation Agreements (DTA) with a number of nations, including China. According to Article 4(2) of the DTA, if a person has a habitual presence in both contracting states (Bangladesh and China) or in neither, he shall be considered a resident of the contracting state of which he is a national, and the competent authorities of the contracting states shall settle the question by mutual agreement.

Profit from Business: The profit of an enterprise of a contracting state is exclusively taxed in that state, unless the enterprise carries on business in the other contracting state through a permanent establishment located there. The enterprise’s profits may be subject to taxation in the other contracting state, but only to the extent that they are due to the permanent establishment. (Article 7 of the treaty preventing double taxation)

Dividends: Dividends given by a corporation that is a resident of one contracting state to a resident of the other contracting state may be taxed in the receiving state. Nevertheless, such dividends may also be taxed in the contracting state in which the company paying the dividends is a resident, in accordance with the laws of that state; however, if the recipient is the beneficial owner of the dividend, the tax charged shall not exceed 10% of the gross amount of such dividends. (Article 10 of the treaty preventing double taxation)

Interest: Interest earned in one contractual state and paid to a resident of the other contracting state is taxable in the other contracting state. However, such interest may also be taxed in the contracting state in which it arises and in accordance with that state’s legislation; however, if the recipient is the beneficial owner of the interest, the tax so imposed shall not exceed 10% of the gross amount of the interest. (Article 11 of the treaty preventing double taxation).

Capital Gain:

Gains earned by a resident of one contracting state from the alienation of immovable property described in Article 6 and situated in the other contracting state are subject to taxation in the other contractual state.

(Article 13 of the treaty preventing double taxation)

Article 23 Removal of Double Taxation

The following measures will remove double taxation in China:

a) When a Chinese resident obtains income from Bangladesh, the amount of tax on that income due in Bangladesh under the terms of this agreement may be offset against the Chinese tax imposed on that person.

However, the amount of credit cannot exceed the amount of Chinese tax on that income calculated in compliance with China’s taxes laws and regulations.

b) Where the income derived from Bangladesh is a dividend paid by a company that is a resident of Bangladesh to a company that is a resident of China and which owns at least 10% of the shares of the company paying the dividend, the credit shall take into account the tax paid to Bangladesh by the company paying the dividend on its income.

Bilateral Investment Arrangements

With numerous nations, including China, Bangladesh has signed Bilateral Investment Treaties (BIT) and Trade Agreements (TA). BITs typically contain terms on the norms of protection and handling of foreign investments, typically addressing topics such as fair and equitable treatment, complete protection, and security. Provisions regarding compensation for losses sustained by foreign investors as a consequence of expropriation or as a result of war and unrest are typically also fundamental to such agreements. The majority of IIAs also govern the cross-border transfer of cash related to foreign investments. Additionally, BITs include a provision for investor-State dispute resolution. Typically, this grants investors the opportunity to file a case to an international arbitration tribunal in the event of a dispute with the host nation. Arbitration is typically sought through the International Centre for the Settlement of Investment Disputes (ICSID), the United Nations Commission on International Trade Law (UNCITRAL), or the International Chamber of Commerce (ICC).

Entities in Business Formation in Bangladesh

*However, if you want to hire a foreign employee, you need to make an inward remittance of US$ 50,000 beforehand.