The following have been updated as per Finance Act 2020.
- A business in Bangladesh can enjoy tax exemption on a varied rate and reduced taxation for various periods depending on the location of the operation.
Five-year tax exemption is offered to businesses located in Dhaka Division and Chattogram Division, but excluding the districts of Dhaka, Narayanganj, Gazipur, Chattogram, Rangamati, Bandarban and Khagrachari districts.
Ten-year tax exemption is offered to businesses located in Rajshahi Division, Khulna Division, Sylhet Division and Barishal Division, but excluding areas under the city corporations. Businesses that set up in the districts of Rangamati, Bandarban and Khagrachari also enjoy this tax exemption period.
- 50% percent of income derived from export is exempted from tax.
- Tax exemption for interest paid on foreign loan.
To enjoy tax exemption or benefits, i) register investments with BIDA, ii) submit an application to National Board of Revenue (NBR), and iii) receive a certificate from NBR within 45 days of the application.
Incentives for export-oriented industry
- 50% of Income derived from export is exempted from tax
- No export duty except on tobacco products
- Bonded warehousing facilities for export goods manufacturing
- Duty drawback facilities
- Export subsidy and cash incentives for specific product exports
- The accelerated depreciation method for accounting income taxes can be availed for machinery and plants used by an entity that does not enjoy tax exemption.
Exemption on import duties
- Capital machineries are subject to reduced rate from customs duties.
- Raw materials to be used for producing export goods are exempt from import duties.
- Approval from the Chief Controller of Import & Export is required for import duty exemption. (Exemptions are provided as per revenue laws and SRO issued under those laws. Bonded warehouse facilities or duty drawback facilities may be availed.)
- Tariff (if paid) refund on import of raw materials for export
Double Taxation Prevention
- Bangladesh has Double Taxation Treaties or DTTs with 34 countries.
Bonded warehousing facilities
- For export-oriented industries
- For large import for local selling in certain items
- 100% foreign ownership is allowed
Repatriation of invested capital, dividend
- Full repatriation is allowed for capital invested from foreign sources. Similarly, profits and dividend accruing to foreign investment can be transferred in full. Facilities are provided for repatriation of invested capital, profits and dividends.
Also, when foreign investors reinvest their dividends or retained earnings, those are treated as new investments.
- There are no restrictions on issuing of work permits for foreign nationals and employees related to projects;
- Provision of transfer of shares held by foreign shareholders to local investors;
- Royalty, technical know-how and technical assistance fees can be remitted;
- The Foreign Private Investment (Promotion & Protection) Act 1980 protects foreign investment from nationalization and expropriation;
- Equal treatment of both local and foreign investment;
- Bilateral and multilateral investment agreements ensure protection of investment. See full list of contracting parties and multilateral agreements later in this chapter.
- 100% FDI, Joint Ventures, Partnerships, PPPs, Non-equity mode (technology transfer, licensing franchising, contracting etc.) and foreign lending are allowed;
- 100% FDI or Joint Venture FDIs are allowed to participate in the primary and secondary stock markets;
- Foreign Investors are allowed to have access to local banks for working capital requirements;
- Intellectual Property Right is protected by law.
Leather and Footwear Sector-specific Incentives
Explore the special incentives Bangladesh offers, in addition to general incentives, to each flourishing sector that serves to diversify its economy.
Leather & Manufacturing of Leather Goods
Bonded Warehousing facilities
Cash incentive of 15% on leather product export
15 percent cash incentive on the export of shoes and bags made by synthetic and fabrics /Customs bond and duty draw back facility
4% cash incentive on the export of shoes and bags made by synthetic and fabrics to the Euro region.
Bangladesh Investment Guidebook – A guide for Investors
Published by Bangladesh Investment Development Authority
Published in Year 2020