Doing business in Bangladesh by opening a Liaison Office/ Representative Office/ Branch Office

January 9, 2020

Liaison Office/Representative Office/Branch Office is an option for doing business in Bangladesh by foreign companies.

It is a legal entity for doing business by maintaining less legal formalities. But there are also some limitations for this kind of legal presence. Mainly it depends on the decisions by the parent company management how they will operate their operations in Bangladesh.

If any foreign company wish to execute the day to day activities on behalf of parent company then the Liaison Office or Representative Office is the most striking decision. As a Liaison Office (LO) or Representative office (RO), it is not permitted to generate income in Bangladesh.

How they meet their expenses?

The parent company will remit the foreign currency as required by the LO/RO to incurred expenses like office rent, employee salaries, and other related expenses to run the office in Bangladesh.

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But what will be the case for Branch Office(BO)?

It may engage in commercial activities to generate income but with prior approval of Bangladesh Investment Development Authority (BIDA).

Who is the approval authority?

Bangladesh Investment Development Authority (BIDA).

BIDA is the ultimate approval authority for Liaison Office or Representative Office or Branch Office in Bangladesh.

First, you have to approach BIDA then to other regulatory authorities i.e. for TIN and VAT registration to NBR, Trade License to City Corporation and for any membership of trade association then to respective trade association.

After receiving the approval from BIDA, different permissions required from Ministry of Home, Bangladesh Bank etc.

If any foreigner is appointed in LO/RO/BO then work permit is required from BIDA and also require security clearance from Ministry of Home. In this case, office has to employ 05 local people preferably in executive position under appropriate pay structure against 01 foreign national.

There are several conditions included with the approval letter issued by the BIDA. Suppose, you have to limit your activities only the authorization is given to perform in Bangladesh, the activities shall remain confined to correspondent banking, report to Bangladesh Bank within 30 days of obtaining permission from BIDA etc.

And within 02 mother of the approval from BIDA, the parent company should remit USD 50,000 as establishment costs and manage estimated operational expenses for 06 months.

How much cost is required to get approval?

The government fee is BDT 25,000.

The professional fees who will support to open the office may differ depends on the professional firm reputation.

Standard time will require 06-08 weeks to complete the whole procedures.

There are some filing also required with Register of Joint Stock and Companies (RJSC).

Books of accounts and audit

Balance sheet and profit and loss account or in case of a company not trading for profit, an income and expenditure account shall be prepared as per companies act 1994.

But as LO/RO/BO is not a company, so what will be the books of accounts to be maintained by them?

Quarterly return of income and expenditure out of remittance receipt from abroad shall have to be submitted to BIDA, tax circle and Bangladesh Bank.

So as per requirement, you have to maintain only income and expenditure statement.

Do you require audit for quarterly return what you will submit to the above three regulatory authority?


As per condition included with the approval of LO/RO/BO, you have to file tax return to your respective tax circle. And you have to submit the audited income and expenditure statement with tax return.

Tax compliance

No tax for Liaison Office or Representative Office.

An assessee liable to pay tax on his taxable income.

But LO/RO has no commercial activities in Bangladesh as discussed above so, they have no income.

As the Branch Office has commercial activities so if it makes profit then it is liable to pay tax at 35%.

In 1998, NBR clarifies the tax exemption facility for Liaison Office or Representative Office upon fulfilling following conditions:

  1. Liaison Office shall not perform activities for any party except its parent company;
  2. Shall not engage in buying or indenting function on behalf of any company including its parent company;
  3. Shall born office expenses in this country by bringing foreign currency through convertible foreign currency account. Shall not have any account in local currency with any bank;
  4. Shall perform inspection, quality control and liaison functions in Bangladesh on behalf of its parent company in connection with only exportable garments and other products.

Upon fulfilling the above conditions, LO/RO will enjoy tax free facilities but have to submit tax return at prescribed time and manner.

Though the LO/RO enjoy 100% tax free facilities but have to comply with the local tax law like tax and VAT should be deducted at source at applicable rate. If it is not complied, then the expenses shall be disallowed resulted to tax at 35%.

And have to file other time to time report to the tax circle i.e. annual statement of information regarding payment of salary as per section 108, annual statement of information regarding filling of return by employees as per section 108A, monthly statement of tax deducted at source under section 58, monthly statement of tax deducted at source from salaries under section 50, ‘Mushak 9.1’ withholding VAT returns, half yearly withholding tax return, etc.

Non-compliance of above reporting will result penalty to the LO/RO.

Bangladesh has taken initiative to implement mega project in infrastructure development like construction of bridge, flyover etc. And also mega project is going on in power sector.

Huge investment are coming into Bangladesh in these sectors from Japan, Russia, China. They are investing directly in private sector as well as implementing government EPC project as a contractor.

Mainly in EPC project, foreign company is executing their contract by opening Branch Office.

In future, the private investment will increase in Bangladesh and there is a huge opportunity for foreign company to doing business in Bangladesh by opening a Liaison Office/Representative Office/Branch Office as they feel comfort.

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