Investment in Bangladesh
Favorable Investment Climate for Investors in Bangladesh
Bangladesh is a winning combination with its completive business-friendly environment and cost structure that can give you best returns:
- Industrious low-cost labor force.
- Strategic location, regional connectivity and worldwide access.
- Strong local market and growth.
- Low cost of energy.
- Proven export competiveness.
- Completive incentives.
- Export and Economic Zones.
- Positive investment climate.
- Bangladesh is one of the top exporters of readymade garments to US and Europe.
- Risk factors of FDI are the minimum in Bangladesh.
- Bangladesh has never defaulted in its debt repayments, nor asked for their rescheduling.
- Bangladesh has an open, market based economy led by a vibrant and innovative private sector which provides the main stimulus to its growth.
- Bangladesh is a homogeneous country with no religious, ethnic or other forms of cultural conflicts.
- Bangladesh has outstanding records in human rights.
- Bangladesh is one of the largest contributors to UN peacekeeping forces and missions and the records of the forces have been exemplary and laudable.
- More stable and developed markets have a web of intricate regulations and other constraints which limit investment opportunities.
- Growing markets, with innovative entrepreneurs, offer greater business opportunities vis-à-vis old markets with stagnant demand and high taxes.
- Movement of capital to emerging markets like the ones represented by countries of south Asia is likely to be profitable with no added risks.
- Existing slacks in the economy of Bangladesh offer enormous opportunities of high return and low risk investments in infrastructures, utilizes, manufacturing and consumer goods industries.
- Large and lumpy investments against this backdrop would not be inflationary and would expand the productive capacity of the economy offering a variety of new goods and services which would further promote sustained economic growth and social development.
- Goldman Sachs has identified Bangladesh as one of the next big eleven emerging markets.
Legal Framework for Foreign and Local Investment
Investment in Bangladesh is well protected by law and by practice. Major laws related to private investment-both foreign and local-are:
- The Bangladesh Export Processing Zones Authority Act of 1980
- The Foreign Private Investment (Promotion and Protection) Act of 1980
- The Bangladesh Investment Development Authority (BIDA) ACT of 2016
- The Companies Act 1994
- The Bangladesh Private Export Processing Zones Authority Act of 1996
- The Import Policy 2022-2024
- Export Policy 2022-2024
- The Industrial Policy 2022
- Policy and Strategy for Public-Private Partnership (PPP), 2010 in addition, foreign investors are required to follow the regulations of the Bangladesh Bank and the National Board of Revenue for taxation and customs matters.
Source: BIDA
Bangladesh Export Processing Zones Authority (BEPZA)
Incentives and Benefits
Fiscal Incentives
• 10 years tax holiday for the Industries to be established before 1st January, 2012 and
Duration and rate of tax exemption for Chittagong, Dhaka, Comilla, Adamjee,& Karnaphuli EPZ for the industries set up after January 01, 2012:
| Duration of Tax Exemption | Rate of Tax Exemption |
| First 02 years (1st and 2nd year) | 100% |
| Next 02 years (3rd and 4th year) | 50% |
| Next 01 year (5th year) | 25% |
Duration and rate of tax exemption for Mongla, Ishwardi & Uttara EPZ for the industries set up after January 01, 2012:
| Duration of Tax Exemption | Rate of Tax Exemption |
| First 03 years (1st , 2nd and 3rd year) | 100% |
| Next 03 years (4th , 5th and 6th year) | 50% |
| Next 01 year (7th year) | 25% |
- Duty free import of construction materials
- Duty free import of machineries, office equipment & spare parts etc.
- Duty free import and export of raw materials and finished goods
- Relief from double taxation
- Exemption from dividend tax
- GSP facility available in many countries
- Accelerated depreciation on machinery or plant allowed
- Remittance of royalty, technical and consultancy fees allowed
- Duty & quota free access to EU, Canada, Norway, Australia etc
Non – Fiscal Incentives
- 100% foreign ownership permissible
- No ceiling on foreign and local investment
- Full repatriation of capital & dividend
- Foreign Currency loan from abroad under direct automatic route
- Non-resident Foreign Currency Deposit (NFCD) Account permitted
- Operation of FC account by ‘B’ and ‘C’ type Industries allowed.
Facilities
- No UD, IRC, ERC and renewal of Bond license
- Work permits issued by BEPZA
- Secured and protected bonded area
- Off-Shore banking available
- Import on Documentary Acceptance (DA) basic allowed
- Back to Back L/C
- Import and Export on CM basis allowed
- Import from DTA (Domestic Tariff Area)
- 10% sale to DTA (Domestic Tariff Area)
- Customs clearance at factory site
- Simplified sanction procedure
- Sub-contracting with export oriented Industries inside and outside EPZ allowed
- Relocation of foreign industries allowed
- Accords Resident-ship and Citizenship
- One Window same day service and simplified procedure.
Source: BEPZA
Bangladesh Economic Zones Authority (BEZA)
Incentives & Benefits for Developers
| SL | Incentive | Approved Incentives by Governing Board |
| • | TAX HOLIDAY | Income tax exemption on income derived from the business
development of EZ in a block of 10 years in 15 years. After expiry of 10th year tax exemption will be 70% in 11th year and 30% in 12th year. But the tax exemption will not be applicable from 13th year. |
| • | VAT ON
ELECTRICITY |
Exemption of VAT on electricity or taxes on sale, of self generated or
purchased electric power for use of processing area of EZ (for 10 years). |
| • | VAT ON
LOCAL PURCHASE |
All purchase excluding petroleum product from Domestic Tariff Area
(DTA) shall be exempted from VAT, sales tax etc. |
| • | CUSTOM
DUTY |
Exemption from custom/excise duties for development of EZs. |
| • | STAMP DUTY | Exemption of stamp duty and registration fees for registration of EZ
land but limited to first transaction only. |
| • | STAMP DUTY | Exemption of stamp duty for registration of loan/credit document. |
| • | INCOME TAXOTHERS | Exemption from dividend tax. |
| • | INCOME TAXOTHERS | Exemption of income tax on service charges |
Incentives & Benefits for Investors/EZ users
| SL | Incentive | Approved Incentives by Governing Board |
| TAX HOLIDAY | For all Economic Zones Income Tax Holiday (ITH)-
– 1st and 2nd year 100%, 3rd year 80%, 4th 70%, 5th 60%,6th 50%, 7th 40%, 8th 30%, 9th 20% and 10th year 10%. |
|
| CUSTOM DUTY | Duty free import of raw materials, construction materials, capital
machineries, finished goods. |
|
| INCOME TAXOTHERS | Exemption from dividend tax (After tax holiday over) | |
| REPATRIATION | Full repatriation of capital and dividend. | |
| FREE FLOW FDI | No ceiling of FDI. | |
| BACKWARD
LINKAGE |
100% backward linkage raw-materials and accessories to sell for export
oriented industries( EOI) in Domestic Tariff Area( DTA). |
|
| LOCAL SALE | 20% sale of finished product to DTA (From Export Processing Area –EPA). | |
| SUBCONTRACTING | Sub-contracting with DTA allowed. | |
| STAMP DUT Y | 50% exemption of stamp duty and registration fees for registration of
leasehold land/ factory space. |
|
| VAT | 80% exemption of VAT on all utility services consumed inside the zone. | |
| CUSTOM DUTY | Duty exemption on Export. | |
| CD ON VEHICLE | Exemption of CD for import of 2 vehicles within 1st 5 years for foreign
investors ( for one time). |
|
| DOUBLE
TAXATION |
Exemption of double taxation subject to Double taxation agreement. | |
| IT INDIVIDUAL | 50% Rebate of income tax on salary income of expatriates for 5 years | |
| CUSTOM BOND | Consider EZ as custom bonded area. | |
| FOREIGN
EXCHANGE |
FC loan availability (To ease business activity). | |
| FOREIGN
EXCHANGE |
FC Account for Non-Resident. | |
| FOREIGN
EXCHANGE |
FC Account for both local and joint venture industry. | |
| JOINT VENTURE | Joint venture allowed | |
| ROYALTIES | Royalty, technical fees will be exempted from income tax. | |
| CAPITAL GAINS | Tax exemption on capital gain. | |
| SHARE
TRANSFER |
Share transfer allowed. | |
| WORK PERMITS | Work permits – No restrictions on issuance of work permits on project
related foreign nationals and employees but limited up to 5% of total employees. |
|
| REINVESTMENT | Re-investment of remittable dividend to be treated as new foreign
investment. |
|
| RESIDENT | Resident visa for investment of US$ 75000 or more. | |
| CITIZENSHIP | Citizenship for investment of US$ 500000 or more |
Source: BEZA
Bangladesh Investment Development Authority
The fiscal incentives offered to a local or foreign investor
- Corporate tax holiday (outside EPZs): 5 to 7 years for selected sectors and areas.
- Accelerated depreciation on cost of capital machinery for new industries in lieu of tax holiday
- Avoidance of double taxation under bilateral tax convention
- Tariff concessions on import of capital machinery
- Tariff concessions on import of raw materials of the export oriented industries
- Bonded warehousing facility
- Cash incentives and export subsidies ranging from 5% to 20% on the FOB value of selected products
- Funds for export promotion, export credit guarantee scheme, permission for domestic sales up to 20% by export-oriented companies outside EPZ areas.
- Remittance of royalty, technical know-how and technical assistance fees
- Citizenship by investing a minimum of US$ 500,000.00 and permanent resident permits on investing US$ 75,000.00
- And many more
Sources: BIDA