How Foreign Companies Can Set Up Branch Office in Bangladesh-01

How Foreign Companies Can Set Up Branch Office in Bangladesh

For international investors intending to establish a presence in Bangladesh, one of the two alternatives is to open a branch office  or a liaison office. Incorporating a Bangladeshi subsidiary firm is another possibility.

A representative office is a location other than the main office where a company is conducted. The majority of branch offices are subdivisions of the company’s many departments, such as human resources, marketing, and accounting.

The world’s total number of commercial bank branch offices is expected to reach 2,195.2 per 100,000 individuals by 2020. This indicates the expansion of the branch office.

Thesis Statement

A branch office may engage in activities that generate revenue or profit. Such activities, however, are usually regulated to some extent. Restrictions and legal requirements must be adhered to.

Pro-Tip: Most liaison offices are not permitted to make any revenue on their own, and a foreign transfer of USD 50,000/- per year from the parent firm is required (as expenditures for office upkeep). So it is better to think once before establishing a branch office.

Principle Points,

1. A foreign company’s liaison/representative office has relatively restricted capabilities which should be followed.

2. Business owners are aware of the impact of growing sales. Establishing a business representative office demands a significant degree of participation in terms of hiring, operations, and other issues.

3. In Bangladesh, a Liaison/Representative office will have no local source of revenue. The parent firm will be responsible for all setup and operations and local workers of the liaison office.

Why A Branch Office Should Be There

1. Get new customers: One way to boost profits is to expand your customer base. The goal of representative office registration is to reach out to new customers and create a relationship with them.

2. Economies of Sales: After representative office registration, it leads to higher production and balances, as well as lower transportation expenses per unit. Economies of scale are evident in manufacturing operations.

3. Grab a huge market: A huge market of a group of people with different cultures can be grabbed. Profit will be there for grabbing a huge number through establishing a liaison office. 

4. Tax benefits: There is no repatriation tax on profits sent abroad. The representative office is covered by the double tax treaties that a country has signed.

We may reasonably assume that every country in the world has signed at least one double tax treaty.

5. Strong control: A  branch office is a dependent type of corporation, which implies that the parent company handles all of the decision-making for it. 

Things To Remember To Establish A Branch Office In Bangladesh

1. Work Permit: Work permits should be sought from the BIDA if the permitted business representative office wants to employ any foreign nationals at their office.

2. Remittance: Quarterly returns of remittances received from overseas must be reported to the BIDA, the involved bank, and the Bangladesh Bank, together with documentation evidence.

3. Payments: The licensed office for the establishment of the representative office must pay duty, income tax, VAT, revenues, and other taxes due to the government under Bangladeshi law.

4. Security clearance: The approval of branch office and liaison offices, as well as the granting of work permits to foreign nationals, will be contingent on the Ministry of Home Affairs providing security clearance.

5. Sole Proprietorship: The establishment of a branch or liaison office under a sole proprietorship will be discouraged.

Approximate Fees To Establish The Branch And Liaison Office

Approximate Fees For Branch Office setup

1. A charge of BDT 25.000 (twenty-five thousand) must be paid by bank Pay Order and the original copy of the Pay Order must be presented to the BIDA, which is a government fee to open a branch office in Bangladesh

Approximate Fees For Liaison Office setup

1. A charge of BDT 25,000 (twenty-five thousand taka only) must be paid to BIDA in order to obtain approval to open a Liaison Office.

Mistakes You Should Avoid For A Branch Office Setup

1. Not enough knowledge: The owner of the representative office should have enough knowledge about the markets and the results of the branch office. 

2. Legal formalities: Many legal tasks and requirements must be completed in order to do representative office registration. Making the error of ignoring such guidelines would be the most detrimental to your business.

3. Go on planned way: Have a strong plan to set up a business representative office, otherwise it will be a complicated process to the owner. The IT services should also be taken care of. 

4. Have enough capital: A growing corporation requires additional space, equipment, staff, and finance. The expected cost should be considered while planning for a liason office. 

Branch Office Setup-Services

Mistakes You Should Avoid For A Branch Office Setup

Our organization can assist you in securely establishing a branch office in our nation. We will walk you through the entire process. We are here to give you the best services possible including EOR services while minimizing your stress.

Our 4 procedures are:

1. Validity period of approval

2. Prerequisite of capital 

3. Time Period of set up.

4. Business activities

Grow With Us

Choosing the optimal global expansion plan for your company is a complex decision that requires careful consideration of several factors. To avoid any form of loss, the owner should follow a clear rule while registering the representative office. Contact Us Today for any type of queries and to have the best service to set up the liaison office in Bangladesh .

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