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Entering the Bangladesh Market: A Guide for Foreign Companies

Most foreign companies can enter Bangladesh with 100% ownership, set up within one to three months, and repatriate their profits, provided they choose the right vehicle and register their investment correctly from day one. Most of the problems we see later can be traced back to decisions taken in the first few weeks.

Bangladesh has a population of over 170 million, a young and increasingly digital workforce, and a fast-growing consumer and industrial market. Its legal framework protects foreign investment under the Foreign Private Investment (Promotion and Protection) Act, 1980, and most sectors are open to foreign investors without a local partner.

This guide is for foreign companies and investors considering Bangladesh. It walks through the seven decisions that shape every market entry: the vehicle, sector rules, registration, money flows, tax, incentives and ongoing compliance. It is a general overview, not legal advice for any particular project.

Step 1: Choose the right entry vehicle

For most investors who plan to earn revenue in Bangladesh, a locally incorporated private limited company (a subsidiary) is the best vehicle. It can carry on any lawful business, it limits the parent's liability, and it exists until it is wound up. Branch, liaison and project offices suit narrower purposes and need prior permission from Invest Bangladesh, the authority that replaced the Bangladesh Investment Development Authority (BIDA) in August 2026.

Branch, liaison and project office permissions are granted for limited terms and must be renewed. A liaison office is often a sensible first step for testing the market. A joint venture is mainly useful where a local partner brings licences, land or distribution, or where a sector requires local participation.

Step 2: Check whether your sector is open, controlled or reserved

Most sectors allow 100% foreign ownership without government pre-approval. Only a short list of sectors is closed to private investment, and a longer list of controlled sectors needs a No Objection Certificate (NOC) from the relevant ministry before you can register with Invest Bangladesh or BEPZA.

Reserved sectors (closed to private investment):

Arms, ammunition and defence equipment

Nuclear power

Security printing and minting

Forestry and mechanised extraction in reserved forests

Controlled sectors (NOC required). The most commercially relevant are:

Banking, finance and insurance

Telecommunications, satellite channels and VoIP

Power generation and distribution

Oil, gas, coal and mineral exploration and refining

Aviation, shipping and seaports

Large infrastructure such as expressways and economic zones

Deep-sea fishing, explosives, acids and chemicals

Beyond the NOC, many activities need an operating licence from a sector regulator. Common examples are Bangladesh Bank for banking, finance companies and payments; the Insurance Development and Regulatory Authority for insurance; BTRC for telecoms; the Directorate General of Drug Administration for pharmaceuticals; and the Microcredit Regulatory Authority for microfinance. Licence requirements can also include minimum capital, local directors or ownership caps. Identify every licence your business model needs before incorporating, because the licence often dictates the company's structure and capital.

Step 3: Incorporate and register

A foreign-owned private limited company can usually be incorporated and fully registered within four to eight weeks, if documents are prepared and legalised in advance. Most of the delay comes from documents signed abroad that must be notarised and attested by a Bangladesh mission.

Name clearance from the Registrar of Joint Stock Companies and Firms (RJSC).

Prepare the constitution: the memorandum and articles of association, plus the shareholder and director details. A private company needs at least two shareholders and two directors, who may be foreign individuals or companies.

Open a temporary bank account and remit the initial share capital through an Authorised Dealer bank. The bank's encashment certificate is your evidence of foreign investment, so keep it safe.

Incorporate with RJSC and obtain the certificate of incorporation.

Register with Invest Bangladesh through its BanglaBiz platform (which replaces BIDA's One Stop Service). This is needed for work permits, remittances and most incentives.

Tax and local registrations: an e-TIN (income tax), a VAT Business Identification Number (BIN), a trade licence from the city corporation, and membership of a chamber or trade body where required.

Sector licences and NOCs identified in Step 2, if applicable.

Convert to an operating bank account and begin operations.

After incorporation, the company must keep statutory registers, hold an annual general meeting, file annual returns with RJSC, appoint an auditor and file tax and VAT returns. Missed filings attract penalties and can delay repatriation later.

Step 4: Bringing money in and taking profits out

Profits, capital and fees can be repatriated from Bangladesh, but only if the original investment came in through formal banking channels and is documented. Bangladesh controls foreign exchange under the Foreign Exchange Regulation Act, 1947 and Bangladesh Bank's Guidelines for Foreign Exchange Transactions. Every outward payment is processed by an Authorised Dealer (AD) bank, which checks the paperwork.

Money in: Remit share capital through an AD bank and keep the encashment certificate. Foreign loans to a Bangladeshi company generally need prior approval (from Invest Bangladesh or Bangladesh Bank, depending on the borrower). Do not fund a local company informally, for example through an employee's personal account. Money that enters that way cannot be repatriated later.

Taxes are deducted at source on most outward payments (see Step 5). Plan the investment structure, including how much to bring in as equity versus loans and whether to license IP to the local company, before the first remittance, because these choices are hard to undo.

Step 5: Understand the tax essentials

A standard foreign-owned private company pays corporate income tax at 27.5%, reduced to 25% if all its transactions are made through bank transfers. Payments sent abroad are taxed at source, often at reduced treaty rates. Tax is governed by the Income Tax Act, 2023 and the VAT and Supplementary Duty Act, 2012, and the tax year normally runs from July to June.

Tax treaties: Bangladesh has treaties with over 40 countries, including China, India, Japan, Korea, Singapore, the UAE, the UK and the US. Treaty relief is not automatic: an NBR certificate or procedure is usually needed before the reduced rate is applied.

Transfer pricing: Transactions with group companies, including fees, royalties, loans and goods, must be at arm's length and documented.

Tax holidays and exemptions are available in some sectors and investment zones (Step 6).

Rates change with each annual Finance Act, so confirm the position for your sector before you finalise your financial model.

Step 6: Investment zones, incentives and the new Invest Bangladesh authority

Since 20 August 2026, a single statutory body, Invest Bangladesh, handles investment registration, incentives, economic zones and PPP projects. The Invest Bangladesh Act, 2026 dissolved BIDA, the Bangladesh Economic Zones Authority (BEZA) and the Public-Private Partnership Authority, and repealed the One Stop Service Act, 2018. Services are moving onto one digital platform, BanglaBiz, and the authority is working towards a 14-day business licensing framework.

Investors who need land, utilities or duty-free imports should consider an investment zone:

Economic zones (now under Invest Bangladesh): government and private zones serving export and domestic markets, including the National Special Economic Zone in Chattogram and zones developed with Japanese partners. They offer tax and duty exemptions and serviced land.

Export processing zones (BEPZA): eight EPZs, including Dhaka, Chattogram, Karnaphuli and Mongla, plus BEPZA's own economic zones. They offer tax holidays of 5–10 years and duty-free import of raw materials and machinery, and are aimed mainly at exporters.

Hi-tech and software technology parks: these were for IT and IT-enabled businesses. The 2026 Act lists the Hi-Tech Park Authority among the merging bodies, so confirm current arrangements with Invest Bangladesh.

Incentive packages differ by zone, sector and investment size, and are often set by government order. Ask for incentives in writing before committing to a site, and check how the transfer to Invest Bangladesh affects existing registrations during the transition.

Step 7: Stay compliant once you operate

Once trading starts, the risks that matter most are expatriate staffing, employment law, data handling and how contracts are enforced.

Expatriate staff: Every foreign employee needs an employment (E) visa and a work permit. The employer first obtains a visa recommendation, the employee enters on an E visa, and the work permit application is filed within 15 days of arrival. Permits are usually granted for one year and renewed. Authorities expect a ratio of about one foreign employee to five local staff in commercial businesses (higher local ratios apply in industry), and evidence that the role could not be filled locally. Since August 2026, visa and work-permit recommendations sit with Invest Bangladesh, and with BEPZA inside EPZs.

Employment law: The Bangladesh Labour Act, 2006 governs appointment letters, working hours, leave, termination benefits, workers' participation funds for qualifying companies, and trade union rights. Written contracts and compliant HR policies prevent most disputes.

Data and cyber security: A Personal Data Protection Ordinance and a Cyber Security Ordinance were issued in 2025. They introduced consent requirements for personal data, and their parliamentary status should be checked. Regulated sectors, especially finance and telecoms, also have data-localisation rules.

Environmental clearance: Industrial projects need an environmental clearance certificate under the Environment Conservation Act, 1995 before operations begin.

Competition and consumer law: The Competition Act, 2012 and the Consumer Rights Protection Act, 2009 apply to pricing, distribution agreements and advertising.

Contracts and disputes: Court litigation in Bangladesh can take years, so commercial contracts should include an arbitration clause. Bangladesh has the Arbitration Act, 2001 and is a party to the New York Convention, so foreign arbitral awards are generally enforceable. Choose the seat, rules and governing law deliberately.

Common pitfalls and practical tips

The costliest mistakes are usually made before the first remittance, not after launch.

Funding the company informally. Capital that arrives outside the banking system has no encashment certificate and cannot be repatriated. Always remit through an AD bank.

Starting regulated activity before the licence. Lending, payments, insurance, telecoms and similar businesses need a licence first. Operating without one can be a criminal offence, and contracts made without it may be unenforceable.

Choosing a branch when a subsidiary is needed, or the reverse. A branch is limited to its approved activities and exposes the parent to unlimited liability.

Using a local nominee to hold shares. Nominee arrangements to get around sector rules are fragile, hard to enforce, and can cost you control of the business.

Ignoring transfer pricing. Royalties and service fees to the parent above the permitted limits, or without documentation, are disallowed and delay remittances.

Weak dispute clauses. Without an arbitration clause, enforcing a contract can take years.

Not tracking policy change. 2026 brought Invest Bangladesh, new digital-finance rules and a pending decision on Bangladesh's graduation from least-developed-country (LDC) status. Graduation is scheduled for 24 November 2026. The UN Committee for Development Policy and ECOSOC have backed a three-year extension to November 2029, and the final decision rests with the UN General Assembly. Graduation will affect trade preferences and some incentives, so exporters in particular should plan for it.

How The Justice Corner can help

The Justice Corner advises foreign companies at every stage of entering Bangladesh, from the first structuring decision to day-to-day compliance. We regularly assist with:

Market-entry structuring: choosing the vehicle, checking sector restrictions and mapping the licences needed

Company formation: incorporation, Invest Bangladesh and BEPZA registrations, and branch and liaison office permissions

Regulatory licensing: financial services, fintech and digital lending, telecoms and other regulated sectors

Foreign exchange and repatriation: investment documentation, dividend and royalty remittances, and foreign loans

Commercial contracts: joint ventures, distribution, technology licences, outsourcing and employment agreements

Disputes: negotiation, arbitration and litigation before the courts of Bangladesh, including the Supreme Court

If you are considering Bangladesh, we offer a short initial consultation to discuss your plans and the right entry route. Contact The Justice Corner, Dhaka, at [email / phone / website].

This guide is a general overview of the law as at October 2026 and does not constitute legal, tax or regulatory advice. Laws, rates and procedures in Bangladesh change frequently, so specific advice should be obtained before acting on any matter discussed here.