When a foreign citizen or legal entity decides to set up a business in Bangladesh then there are mainly three options:
- Liaison Office (does not have legal personality itself)
- Branch Office (does not have legal personality itself) and
- Locally registered company (being a separate entity with legal personality)
Foreign companies may open it’s Liaison Offices in Bangladesh for undertaking liaison activities on it’s parent company’s behalf. A Liaison Office, however, is not allowed to undertake any business or commercial activities for generating revenue in Bangladesh. All costs and expenses must be met by the parent company abroad.
Since a Liaison Office is not eligible for generating revenue in Bangladesh it is not subject to pay corporate taxes. Just to avoid confusion, both Representative Office and Liaison Office refers to the same thing in Bangladesh.
Foreign companies may open it’s Branch Offices to conduct business in Bangladesh as an extension of the parent company abroad. Unlike a Liaison Office, a Branch Office can perform broader scope of activities and generate income in Bangladesh – therefore subject to pay corporate taxes as well.
Locally Registered Company
Foreign citizens or legal entities can setup a whole new company in the form of private or public limited company in Bangladesh. In most sectors 100% foreign ownership is allowed and prior approval of the government or any government agency is not required.