Opening a branch in Bangladesh is a key strategic move for foreign companies aiming to expand in South Asia. A branch office acts as an extension of the parent company, allowing it to operate without forming a separate legal entity. Foreign investors can choose between opening a representative office or a liaison office, depending on the nature of the activities they wish to conduct. To open a branch in Bangladesh, the first step is to register the company with the relevant authorities, which requires Bangladesh Bank approval. This is essential for foreign companies intending to operate in the country, as Bangladesh Bank oversees all foreign currency transactions.
For a foreign company to establish a branch, it must obtain a trade license and adhere to the regulations set by the inter-ministerial committee. The company must also consult with a law firm to ensure compliance with local laws. In some cases, a private limited company structure may be more suitable for business operations in Bangladesh. Additionally, the Bangladesh Embassy plays a role in assisting foreign companies with the company incorporation process. By working with the appropriate authorities and understanding the legal framework, foreign companies can successfully set up their operations in Bangladesh, tapping into the country’s growing market.
Branch offices in Bangladesh are regulated by the Bangladesh Investment Development Authority (BIDA), which oversees the compliance with local laws and regulations. To tap into the available business opportunities, companies must first register their business and obtain the necessary approvals from BIDA. An encashment certificate, issued by the central bank, is required to ensure that foreign currency transactions are in compliance with local financial regulations. Branch offices are authorized to carry out specific business activities such as export/import, research, and providing services, which can offer substantial growth prospects in various industries. However, they are restricted from engaging in retail trade or manufacturing unless special permission is granted by the inter-ministerial committee, a body responsible for reviewing and approving certain business activities. This ensures that the branch office’s operations align with national economic priorities. By adhering to BIDA’s guidelines and obtaining the required certifications, foreign companies can successfully establish their branch offices and benefit from the dynamic business environment in Bangladesh. This framework facilitates investment while maintaining local market regulations, creating opportunities for both domestic and international growth.
To set up a branch office, you will need to prepare and submit the following documents:
Submit the required documents to BIDA for approval. Once approved, you will receive permission to open the branch office, specifying the permissible business activities.
After obtaining BIDA approval, register the branch office with the RJSC to formalize its legal presence. Required steps include:
To ensure full compliance with local tax laws, businesses must obtain a business identification number (BIN), which serves as a unique identifier for the company in the eyes of tax authorities. This number is essential for conducting various legal and financial transactions, including filing taxes and making payments. In addition to the BIN, businesses must secure a Tax Identification Number (TIN) and a VAT Registration Number. The TIN is primarily used for income tax purposes, helping authorities track the company’s tax obligations and reporting. On the other hand, the VAT Registration Number is necessary for businesses selling goods or services subject to VAT. This ensures that the company properly collects and remits VAT to the government.
Both the TIN and VAT Registration Numbers are integral to maintaining transparency and avoiding penalties related to tax evasion. By obtaining these numbers, the company can confidently navigate the tax landscape, meet its financial obligations, and engage in lawful business activities. Essentially, these identifiers streamline tax filing, ensure timely tax payments, and promote trust with the authorities. Complying with these requirements is vital to avoid disruptions and ensure the smooth operation of the business.
To facilitate transactions, you must open a corporate bank account in Bangladesh. For this process, you will need the RJSC registration certificate, BIDA approval, and other KYC documents.
Recruit local employees and set up the necessary infrastructure for your branch office. Ensure that employment contracts comply with Bangladesh labor laws.
At S. Rahman & Co., we provide end-to-end support to help businesses set up and operate branch offices in Bangladesh. Our services include:
Opening a branch or liaison office in Bangladesh offers many growth opportunities in a rapidly expanding market. However, businesses must navigate various regulatory and administrative hurdles for a successful setup. Key steps include obtaining a BIDA permission letter, which approves the Bangladesh Investment Development Authority, and registering the branch with the Registrar of Joint Stock Companies and Firms under the Companies Act. It’s essential to adhere to Bangladesh’s income tax ordinance, including complying with foreign exchange regulations and ensuring inward remittance is handled correctly.
Setting up a branch office involves selecting a strategic location, conducting market research, and managing costs associated with government fees. One of the initial tasks is opening a local bank account, which requires compliance with foreign exchange regulations. Businesses also need to recruit local personnel and potentially obtain work permits for foreign employees.
Navigating these complex requirements can be challenging, but partnering with branch office setup services and legal experts can simplify the process. Collaborating with professionals who understand the local market and regulatory landscape is essential for success. By ensuring compliance with all necessary legal frameworks, including working with the Bangladesh High Commission or embassy, businesses can position themselves for long-term success in Bangladesh’s growing economy.