Foreign Branch & Rep Offices (Liaison) in Bangladesh (2025): A TRW Law Firm Playbook

Prepared by TRW — Tahmidur Rahman Remura. We set up, operate, and wind down Branch and Liaison/Representative Offices for global clients across manufacturing, tech, finance, energy, FMCG, logistics, and services.

Executive snapshot

Foreign companies have two lightweight ways to enter Bangladesh without incorporating a local subsidiary:

• Branch Office — an extension of the foreign company that can conduct revenue-generating activities in Bangladesh within the permitted scope, enter contracts, and book Bangladesh-source income (taxable here).
• Liaison/Representative Office — a non-commercial presence for market research, coordination, and communication; no local sales or invoicing; expenses funded solely by inward remittances from the head office.

Both require prior approval from the Bangladesh Investment Development Authority (BIDA); approvals are typically granted for three years, and a minimum inward remittance of USD 50,000 must be brought into Bangladesh within two months of approval to fund setup and operations. (bida.gov.bd)

Branch vs. Liaison at a glance

Notes: both models are not separate legal persons; liabilities flow back to the foreign company. Proper insurance and contractual risk controls are essential.

When to choose which

Choose a Liaison/Rep Office if you need an on-the-ground team to coordinate, source, supervise vendors, run marketing, and collect information—without selling, billing, or receiving local revenues.

Choose a Branch if you want to contract with Bangladesh customers, invoice locally, operate projects, import/export (with sector permissions), hire at scale, and create a tax presence aligned to Bangladesh operations—without forming a separate subsidiary.

If you expect to raise capital in Bangladesh, offer equity to talent, or ring-fence liabilities, a local company (subsidiary) is often better.

The legal & regulatory backbone (what actually governs your office)

1. BIDA approval — The gateway license, issued for a defined scope and term (commonly 3 years). BIDA’s guidance also requires minimum inward remittance of USD 50,000 within two months of approval for Branch and Liaison Offices. (bida.gov.bd)
2. Central bank (Bangladesh Bank) foreign-exchange rules — Your authorized dealer (AD) bank implements these. For branches, after-tax profits may be remitted without prior Bangladesh Bank approval against audited accounts and other specified documents. (BB)
3. Tax & VAT — Branches are taxed on Bangladesh-source income; branch profit remittance tax (BPT) at 20% applies to remitted after-tax profits. Liaison offices don’t earn local income but must meet withholding, payroll, and compliance where relevant. (Tax Summaries)
4. Company law filings & local licenses — Practical setup includes TIN, trade license, VAT BIN (if needed), office lease, and other sectoral permissions (e.g., IRC/ERC for trade, if applicable).

What you can (and cannot) do

Liaison/Representative Office — permitted themes

• Communication & coordination between head office and local parties
• Market research, promotional activities, brand building
• Supervision of distributors or vendors (without taking title to goods)
• No local sales; no invoices to Bangladesh customers; no import/export in own name; no commercial service fees collected locally
• Funding only via inward remittance; maintain books and supporting documents

Branch Office — permitted themes

• Contract & invoice for goods/services in Bangladesh within BIDA-approved scope
• Open L/Cs, handle import/export where permitted by approvals and sector rules
• Hire staff, lease premises, and receive local payments
• Pay taxes on Bangladesh-source income; repatriate after-tax profits through AD bank on documentation

TRW’s formation roadmap (both models)

Phase 1 — Strategy & scope

• Choose model (Branch vs. Liaison) and define precise scope (what you will do; where; headcount; banking; FX flows).
• Prepare board resolution and project note from the parent company; collate certified corporate documents (incorporation, MoA/AoA, latest audited financials).

Phase 2 — BIDA approval

• File via BIDA OSS, attach notarized/legalized documents, pay fees, and respond to clarifications.
• Approval term typically 3 years; remit USD 50,000 within two months of approval to your Bangladesh bank account to fund operations (BIDA requirement). (bida.gov.bd)

Phase 3 — Banking, tax & local licenses

• Open bank accounts with an AD bank; register for TIN; obtain trade license (for the office premises).
• VAT: Branch registers if making taxable supplies; Liaison usually does not (no supplies), but still maintains vendor VAT documentation and handles any applicable withholding.

Phase 4 — Operationalization

• Office lease, HR policies, payroll setup, work permits/E-visas (BIDA issues recommendations for commercial offices), procurement, IT & data policies, insurance.

Phase 5 — Reporting & renewals

• Keep books per Bangladesh standards; audit annually.
• BIDA reporting: submit activity and expenditure updates as directed; apply for renewal before expiry with updated plans and compliance proofs.

Tax, VAT & repatriation — the branch numbers that matter

• Tax base: Branches are taxed in Bangladesh on income that accrues or arises here. Keep transfer-pricing and cost-sharing documentation if any head-office charges are cross-border. (Tax Summaries)
• Branch profit remittance: After paying corporate income tax and finalizing audited accounts, branches may remit profits to head office through their AD bank. A 20% Branch Profit Tax (BPT) applies to the amount remitted; AD banks require proof of BPT deposit before releasing remittances. (Tax Summaries)
• FX mechanics: Under GFET, AD banks can remit branch profits without prior Bangladesh Bank approval when the application includes the audited local accounts, consolidated HO accounts, tax payment evidence, and other listed documents. Build this evidence pack into your year-end timetable. (BB)
• Liaison offices: No local revenue; maintain expense ledgers, payroll & withholding where applicable; file returns/withholding statements as required; unspent funds can be returned on closure with bank/regulatory clearances.

Employment & visas (expat + local)

• Local hires: Standard labour-law obligations apply (contracts, wages, hours, leave, social benefits where applicable, termination protocol).
• Expatriates: BIDA issues E/E-1 visa recommendations for commercial offices; ensure quota planning, work permits, and TAX ID (TIN) for individuals. Maintain a 5:1 local-to-expat staffing policy as a practical benchmark unless your sector’s rules state otherwise.
• Payroll & withholding: Operate a compliant payroll with monthly withholding and annual employee tax certificates.

Accounting, audit & compliance calendar

• Books & audit: Maintain ledgers in BDT; appoint a local statutory auditor; finalize audited financial statements annually.
• Tax filings:
• Branch — annual corporate return, tax payments & certificates, BPT deposit before profit remittance.
• Liaison — file as directed (e.g., information returns, withholding statements), maintain audited expense statements.
• VAT: Branch files VAT returns if registered; keep Mushak documents aligned to ERP.
• BIDA reports & renewal: Submit periodic activity/expenditure reports; apply for renewal well ahead of expiry with updated plans and compliance proofs.

Banking & foreign exchange (how money moves)

• Funding:
• Liaison — only via inward remittances from head office to the local bank account (use correct purpose codes).
• Branch — local receipts + head-office remittances as needed.
• Payables abroad: Service fees to the head office or third parties require contracts, invoices, withholding tax, and AD bank forms.
• Profit repatriation (branch): Coordinate audit → tax finalization → BPT deposit → AD bank remittance in one workstream to avoid delays. No prior Bangladesh Bank approval is needed if documents match GFET lists. (BB)

Governance, risk & controls that regulators expect

• Scope discipline: Operate within BIDA-approved activities; update approvals if the business model evolves.
• Contracts & stamps: Use Bangladesh-compliant stamp duties on contracts executed here; keep bilingual templates if you face public bodies.
• Data & IT: Secure customer/vendor data; define cross-border transfer rules; adopt SOC-style controls for cloud apps.
• Sanctions/KYC: Screen counterparties, vessels, and ports; maintain UBO files for major vendors/agents.
• Insurance: Public liability, professional liability (if services), employee covers, and business interruption where justified.

Common pitfalls (and how to avoid them)

1. Using a Liaison to “soft-sell.” Any invoicing, receivables, or deliveries that look like sales can attract regulator and tax scrutiny. If you intend to sell, use a Branch (or subsidiary).
2. Missing the USD 50,000 inbound remittance deadline. BIDA expects the funds within two months of approval—plan bank KYC and remittance channels before approval lands. (bida.gov.bd)
3. Treating profit remittance as a routine bank transfer. You need audited accounts, tax clearances, and BPT deposit before AD banks release the remittance. Build this into your year-end calendar. (Tax Summaries, BB)
4. VAT blind spots in branches. If you make taxable supplies, register and invoice with Mushak; reconcile VDS and input tax credits monthly.
5. Letting approvals lapse. Renewal is paperwork-heavy—start months in advance.
6. Over-promising in visa applications. Align headcount plans with real revenue/funding and show training/knowledge-transfer to locals.

90-day launch plan (illustrative)

Days 1–15 — Pick model; draft scope note; assemble parent docs (incorporation, MoA/AoA, audited financials, board resolution).
Days 16–30 — File BIDA application; respond to clarifications; identify AD bank and begin KYC.
Days 31–45 — On approval, open bank account; remit USD 50,000 (Liaison/Branch); secure office lease, TIN, trade license; plan VAT (if Branch). (bida.gov.bd)
Days 46–60 — Hire core team; complete payroll setup; initiate E/E-1 visa recommendations; finalize insurance.
Days 61–90 — Go live; implement accounting & VAT workflows; prepare BIDA reporting templates; calendar renewal and audit milestones.

Exit, conversion & scale-up

• Conversion to subsidiary: Migrate contracts, employees, and licenses; close the Branch/Liaison after settling taxes and repatriating balances via AD bank.
• Closure: Submit closure application, audited closing statements, tax clearances, and bank certificates; for Branch, clear BPT on final remittance. (Tax Summaries)
• Scale-up path: Many clients start as Liaison → upgrade to Branch for pilots → convert to subsidiary for investment, limited liability, and equity tools (ESOPs, JV).

FAQs

Q1. Can a Liaison Office bill Bangladesh customers?
No. A Liaison cannot raise invoices or earn local revenue; it is funded only by inward remittances from head office.

Q2. Can a Branch remit profits freely?
Yes—after paying taxes and depositing BPT (20%) on the remittance amount, your AD bank can remit without prior Bangladesh Bank approval if you provide the required audited accounts and documents. (Tax Summaries, BB)

Q3. How long is the initial approval?
Typically three years, renewable; Branch and Liaison must also bring USD 50,000 within two months of approval to fund operations. (bida.gov.bd)

Q4. Do we need VAT?
Branch — yes, if you make taxable supplies (invoice with Mushak). Liaison — generally no VAT registration (no supplies), but maintain purchase VAT records and handle withholding duties where applicable.

Q5. What if we outgrow the structure?
Upgrade to Branch (from Liaison) or convert to a subsidiary for limited liability, capital raising, and clearer tax planning.

How TRW helps (end-to-end)

• Model selection & scoping (Branch vs. Liaison vs. Subsidiary), with tax and FX mapping.
• BIDA application through OSS, security clarifications, and approval management.
• Banking & FX: AD-bank onboarding, purpose codes, profit-remittance packs.
• Tax & VAT ops: TIN/VAT, Mushak workflows, withholding, BPT planning, and audits.
• People & permits: E/E-1 visa recommendations, work permits, payroll, and policies.
• Governance: contracts, stamp duty, data/privacy, sanctions/KYC.
• Renewal / closure: filings, clearances, and repatriation.

Want a tailored Branch vs. Liaison readiness memo for your board? We’ll build it around your sector, customers, and FX flows.

References (max 3)

1. BIDA FAQ (OSS pathway) — initial approval 3 years; USD 50,000 inward remittance within two months of approval; setup sequence. (bida.gov.bd)
2. Bangladesh Bank — Guidelines for Foreign Exchange Transactions (Vol. 1) — AD banks may remit branch profits without prior BB approval on submission of audited accounts and supporting documents. (BB)
3. PwC Worldwide Tax Summaries — Branch Income — 20% Branch Profit Tax on remittances; AD bank requires proof of BPT deposit to release remittance. (Tax Summaries)

Disclaimer: This playbook is general information, not legal advice. Rules and bank practices evolve; obtain tailored counsel for your sector, contracts, and funding.