Capital & Profit Repatriation for Foreigners in Bangladesh: A Guide
Investing in a foreign country can be a rewarding but complex venture. In Bangladesh, foreign nationals and entities have the opportunity to invest in industrial projects with government approval. However, repatriating capital and profits requires adherence to specific regulations and procedures. This article will explore the intricacies of capital and profit repatriation for foreigners in Bangladesh, shedding light on the regulations, permissions, and processes involved.
Repatriation of Foreign Capital and Capital Appreciation
Foreign capital invested in Bangladesh for industrial projects with the approval of the government is allowed to be repatriated from Bangladesh. This includes the capital appreciation, provided that approval is obtained from Bangladesh Bank. It’s crucial to note that capital investments are subject to certain conditions, and approval from the government or Bangladesh Bank must be secured before initiating the repatriation process.
Dividend and Profit Repatriation
Dividends and profits earned from investments in Bangladesh are now subject to fewer controls, making it more accessible for foreign investors to repatriate these earnings. However, certain conditions and procedures must be followed:
- Approval from Bangladesh Bank: Prior approval from Bangladesh Bank is required before repatriating profits from foreign subsidiaries to the parent company. This step helps ensure compliance with regulations.
- Tax Clearance: All applicable taxes must be paid before initiating the repatriation process.
- Application for Remittance: Applications for the remittance of profits should be made to Bangladesh Bank through the applicant’s bank. The applicant must ensure that all necessary documentation and requirements are met.
Repatriation of profits from Bangladesh is subject to fulfillment of specific conditions, such as the quantum and installments of repatriation, as determined by relevant regulations and guidelines at the time.
Repatriation of Current Assets for Foreign Nationals
Foreign nationals temporarily residing in Bangladesh have the option to repatriate their current assets, such as savings from salary and dividends, to their home countries. However, this process requires prior permission from Bangladesh Bank. The availability of this option can provide a sense of financial security to foreign residents.
Receipt of Remittances in Bangladesh
In Bangladesh, there are no restrictions on receiving remittances through proper banking channels from foreign countries. This flexibility allows individuals and businesses to manage their international financial transactions with ease. Additionally, there are no constraints on the import of foreign-currency cheques.
Conversion of Foreign Currency
Foreign currency drafts can be converted freely through authorized dealers, simplifying the process of converting foreign funds into the local currency. Traveler’s cheques and foreign currency notes or coins may also be converted into the Bangladeshi taka through money changers authorized by Bangladesh Bank to undertake such transactions.
Remittance Agreements for Royalty, Technical Know-How, and Technical Assistance
For agreements related to the remittance of fees for royalty, technical know-how, and technical assistance, certain guidelines and limits must be observed:
- Prescribed Limits: There is no requirement for prior permission from the Bangladesh Investment Development Authority (BIDA) for agreements falling within the prescribed limits. However, these agreements must adhere to specific financial thresholds.
- New Projects: In the case of new projects, the fees and expenses connected to technology transfer (such as service fees and marketing commissions) should not exceed an aggregate limit of 6 percent of the commercial value of imported machinery.
- Recurrent Annual Fees: For recurrent annual fees for royalties and other expenses, such as those related to technical know-how, technical assistance, operational services, and product marketing, the aggregate limit should not exceed 6 percent of the previous year’s sales of the firms declared in the tax return.
Once the technical transfer agreements fall within the prescribed limits, they must be furnished to BIDA for registration. Proposals that exceed the prescribed limits will require prior approval from BIDA. To obtain approval, applicants must submit the necessary documents and a copy of the relevant draft agreement.
Here’s an expansive table summarizing the key points related to capital and profit repatriation for foreigners in Bangladesh:
|Foreign Capital Investment||Foreign capital invested in Bangladesh for industrial projects with government approval can be repatriated, including capital appreciation, with prior approval.|
|Dividend and Profit Repatriation||Dividends and profits earned from investments in Bangladesh can be repatriated with fewer controls, subject to specific conditions and procedures.|
|Approval from Bangladesh Bank||Prior approval from Bangladesh Bank is required for repatriating profits from foreign subsidiaries to the parent company.|
|Tax Clearance||All applicable taxes must be paid before initiating the profit repatriation process.|
|Application for Remittance||Applications for remittance of profits should be submitted to Bangladesh Bank through the applicant’s bank, ensuring compliance with documentation and requirements.|
|Repatriation Conditions||Repatriation of profits is subject to fulfillment of conditions, including quantum and installments of repatriation, as determined by relevant regulations and guidelines.|
|Repatriation of Current Assets for Foreigners||Foreign nationals temporarily residing in Bangladesh can repatriate their current assets with prior permission from Bangladesh Bank.|
|Receipt of Remittances in Bangladesh||There are no restrictions on receiving remittances through proper banking channels from foreign countries in Bangladesh.|
|Conversion of Foreign Currency||Foreign currency drafts can be freely converted through authorized dealers, simplifying the conversion of foreign funds into Bangladeshi taka.|
|Remittance Agreements for Royalty and Fees||Agreements for remitting fees related to royalty, technical know-how, and technical assistance must adhere to prescribed limits and may require BIDA approval.|
Foreign Capital Investment and Repatriation:
- Foreign capital invested in Bangladesh for industrial projects with the government’s approval is generally allowed to be repatriated. This includes both the original investment and any capital appreciation. However, prior approval from Bangladesh Bank, the central bank of Bangladesh, is a prerequisite.
Dividend and Profit Repatriation:
- Repatriating dividends and profits earned from investments in Bangladesh is subject to specific regulations and procedures. These have evolved to provide a more favorable climate for foreign investors. The government has relaxed many controls, making it easier to repatriate such earnings. However, it’s important to ensure compliance with applicable tax and regulatory requirements.
Approval from Bangladesh Bank:
- Before remitting profits earned from foreign subsidiaries to the parent company, prior approval from Bangladesh Bank is essential. This approval process serves as a safeguard to ensure that all statutory and regulatory obligations are met.
- One critical requirement for profit repatriation is to clear all applicable taxes. This includes corporate income tax, withholding tax on dividends, and any other relevant taxes. Tax clearance certificates must be obtained before initiating the repatriation process.
Application for Remittance:
- To repatriate profits, investors need to submit applications to Bangladesh Bank through their designated banks. These applications must include all necessary documentation and evidence of tax clearance.
- The repatriation of profits is subject to specific conditions, which can vary depending on the regulatory environment. These conditions may include restrictions on the amount that can be repatriated at once, limitations on installment payments, and the need to demonstrate compliance with relevant regulations.
Repatriation of Current Assets for Foreigners:
- Foreign nationals temporarily residing in Bangladesh can seek permission from Bangladesh Bank to repatriate their current assets, such as savings derived from salary or dividends. This helps provide flexibility for expatriates while working in Bangladesh.
Receipt of Remittances in Bangladesh:
- Bangladesh allows the receipt of remittances from foreign countries through proper banking channels. There are no restrictions on receiving funds from abroad, which is essential for facilitating foreign investment and business operations.
Conversion of Foreign Currency:
- To ease the process of bringing foreign funds into Bangladesh, foreign currency drafts can be freely converted into Bangladeshi taka. This can be done through authorized dealers, which are financial institutions approved by Bangladesh Bank for this purpose.
Remittance Agreements for Royalty and Fees:
By understanding and adhering to these legal aspects, foreign investors can navigate the process of capital and profit repatriation in Bangladesh while ensuring compliance with the country’s regulatory framework. These measures contribute to a more favorable environment for foreign investment and business operations in the country.
These key points provide a comprehensive overview of the regulations, procedures, and considerations related to capital and profit repatriation for foreigners in Bangladesh.
Navigating the rules and regulations surrounding capital and profit repatriation in Bangladesh can be a complex task. It is crucial for foreign investors and residents to understand the specific guidelines and procedures established by Bangladesh Bank, BIDA, and other regulatory authorities. By following the legal processes and seeking the necessary approvals, foreign nationals and entities can securely repatriate their investments and earnings while contributing to the growth and development of Bangladesh’s economy.