Bangladesh has recently developed very liberal investment policies and offers lucrative financial incentives to attract investors and entrepreneurs from all over the world. The country also have a massive working population of over 50 million people who can easily be trained and be tailored to business needs. Comparing the foreign investment policies of all the South Asian countries, investing in Bangladesh could be like gold mining for the foreign investors. The government is constantly trying to innovate incentives and policies to facilitate this growth and here is list of the key benefits for the foreign investors.
SEE ALSO: Investment Opportunities In Bangladesh
Tax Holidays: Industries in export processing zones will have 5 to 7 years of tax break, depending on the location. Any investments in developing the economic zones will have 10- 12 years of tax break. Industrial undertakings will have 5 to 10 years, of tax break, depending on the location. Investments in any physical infrastructure development will get 10 years of tax break. Coal based privately owned power generation companies will get 15 years in tax break. Non coal based power generating companies will get 10 years in tax break.
The period of tax holiday is calculated from the month of commencement of commercial production or operation of the industrial undertaking. The eligibility of tax holiday is determined by the National Board of Revenue and must get relevant clearance.
Custom Duty: Value Added Tax (VAT) is not applicable to imported capital machines and spare parts.
Double Taxation: Double taxation can be avoided in most cases as Bangladesh benefits from many bilateral investment agreements with multiple countries.
Other Notable Incentives: Foreign Investors can have full repatriation of their capital invested, profits and dividends derived from their businesses, if they wish to do so. That also means allowing to wind up the business completely.
100% ownership allowed to foreign investors unlike many other countries and also can choose to partner with local people or company.
A Foreign investor can participate in the initial primary offerings in the stock market without any restrictions. Also, the income generated from the stock dividends are fully tax free.
Tax exemption on the interest on any foreign loans under some conditions. Those conditions can be checked via Board of Investment.
Six months multiple entry visa for investors are allowed. Permanent residency can be given simply by investing a minimum of US$ 75,000. Citizenship can also be obtained by investing a minimum of US$ 500,000 or by transferring US$ 1,000,000 to any recognized financial institution.
Export Oriented Business Incentives: The driving force of the recent economic growth has been mostly based on export based businesses. Therefore in order to encourage export based industries has been the key focus in developing the current industrial policy and the government ensures all support and co-operation to the exporters as per the export policy. Some of the facilities and incentives for export based businesses are as follows:
100% export oriented industries do not require to pay any import duty. Special bonded warehouse against back-to-back letters of credit are available for export based businesses. Up to 90% bank loans offered, if the value against irrevocable and confirmed letters of credit/sales agreement are available.
In order to encourage backward linkages, export-oriented industries using local raw materials instead of imported materials, are given additional facilities and benefits at the prescribed rates. These incentives are also available for the the companies that supply locally sourced raw materials to the export oriented companies. Export oriented industries are allocated foreign exchange for publicity campaigns and to operate offices abroad. Export earnings from handicrafts and cottage industries are completely exempted from income tax.
Duty-free samples can be imported for manufacturing exportable products. However, the quantity of samples and its value is to be determined jointly by the concerned agency and the National Board of Revenue. Companies supplying local products to export oriented industries against foreign exchange are also treated as an indirect exporter and the company is entitled to avail all the export related facilities.
Industries producing toys, luggage, fashion articles, electronic goods, leather goods, diamond cutting, polishing, jewelry, stationery goods, silk cloth, gift items, artificial flowers, vegetable processing and engineering consultancy services considered as thrust sectors and provided special facilities in the form of cash subsidies, venture capital and other facilities.
Export oriented industries are exempted from paying local taxes such as municipal taxes. Leather industries exporting at least 80% of their manufactured products will be treated as 100% export oriented industries. Manufacturing fabrics locally such as woven, knit, hosiery, grey, dyed, garment check, printed, hand loom, silk and specialized fabrics and supplying their products to 100% export based garment industries are entitled to avail a cash subsidy equivalent to 25%.
Facility of tax exemption on income for non-resident shareholders during tax exemption period of an industry set up in an export processing zone and also after the tax exemption period if the income is re-invested in the same project. Tax exemption on income/dividend from the industrial undertakings set up in an export processing zone for ten years from the date of commercial production.
Investment Incentives For NRB: Government also encourage non-resident Bangladeshi investors to invest in this growing economy and has facilities available similar to those of foreign investors. In order to encourage them further, the government has allocated a quota of 10% for non-resident Bangladeshis to buy primary shares. Furthermore, they can also maintain a foreign currency deposit in the non-resident foreign currency deposit account. Most banks both private and public banks now provide foreign currency deposit accounts to non resident Bangladeshi.