Doing Business in Bangladesh

Do you want to expand your business into Bangladesh, or hire employees there? Find out the key things you need to know about Bangladesh expansion below.

Bangladesh Economy Overview

Currency

Bangladeshi taka (৳) (BDT)

Working hours

48 hours/week

Public/bank holidays

21 public holidays

Capital

Dhaka

Languages

Bengali (also known as Bangla)

Population

174.7 million

Minimum hourly salary

150 BTD (1.37 USD)

Tax year

1 July – 30 June

Date format

DD/MM/YYYY

Misclassification penalties

Misclassification of contractors in Bangladesh may lead to fines and penalties for the offending company.

Fun fact

A middle power in the Indo-Pacific, Bangladesh is home to the sixth-most spoken language in the world, the third-largest Muslim-majority population in the world, and the second-largest economy in South Asia.

Expanding your team in Bangladesh offers access to a diverse and rapidly growing talent pool in South Asia. With its vibrant economy and skilled workforce, Bangladesh presents excellent opportunities for businesses seeking to grow. Remote People’s recruitment agency services in Bangladesh provide end-to-end hiring solutions, from talent sourcing to onboarding, ensuring a seamless and efficient recruitment process.

In this guide, we’ll explore how Remote People can help your organization connect with top talent in Bangladesh and meet your business objectives.

Considered to be among the Next 11 (N-11) emerging markets identified by Goldman Sachs, Bangladesh is a country of great opportunity for foreign businesses. It has experienced an average annual growth in GDP of between 6% and 7% over the last decade, the highest in South Asia. In the three years since the global impact of the COVID-19 pandemic in 2020, Bangladesh has registered GDP growth of 6.9%, 7.1%, and 5.8%. From declining poverty to increasing literacy and life expectancy, all the markers of social and economic growth in Bangladesh are positive. The nation has targeted becoming an upper-middle-income country by 2031 and projections anticipate it will be one of the fastest-growing economies in the world by 2050.

This guide seeks to provide an overview of the economy and business regulations in Bangladesh alongside the various benefits of doing business in the region.

Table of Contents show

Overview of Bangladesh's Economy

Bangladesh is one of the world’s leading exporters of ready-made garments, with only China and the European Union generating more.

The manufacturing and transport of these products are the traditional cornerstones of the country’s economy, though recent years have seen an increased focus on diversification.

Government investment and infrastructure improvements are some of the initiatives hoping to further boost the Bangladesh economy, as are stronger ties with neighbors like Bhutan, China, India, and Nepal.

Factors Favoring Bangladesh as an Outsourcing Destination
Large workforce
Youthful workforce
University-educated workforce
Competitive pricing for business outsourcing
High-quality business outsourcing services

In addition to this, Bangladesh has the right collection of resources to provide high-quality and competitively priced business outsourcing for global investors.

Taxes

Employer tax: 32.50%

There are no mandatory social insurance contributions for the employer.

Employee tax: 0-25%

There are no mandatory social insurance contributions for the employee.

Income tax

Gross income

Up to Tk. 350,000
350,001 – 450,000 Tk
450,001 – 750,000 Tk
750,001 – 1,150,000 Tk
1,150,001 – 1,650,000 Tk
1,650,000 Tk and above

Progressive tax rate

Business Regulation in Bangladesh

Bangladesh’s governments have prioritized preferential treatment for global investors since the country gained independence in 1971. The Foreign Private Investment (Promotion & Protection) Act 1980 established a policy framework that guaranteed there would be no discrimination between local and foreign investment and that profits generated in the country could be repatriated freely.

Any foreign business seeking to operate in Bangladesh is required to register with the Registrar of Joint Stock of Company. Where appropriate, it must ensure it receives a tax identification number, VAT certificates, and any applicable trade licenses. Businesses should also ensure they are fully aware of labor laws and regulations covering their sector, including tax obligations and exemptions.

Among the requirements of doing business in Bangladesh are:

Business Registration

There are several stages of registering a business entity in Bangladesh. These include getting a name clearance certificate from the Registrar of Joint Stock of Company, paying any capital and incorporation expense to a temporary bank account, and, after providing the necessary documents, applying for incorporation. Registration also includes obtaining a tax identification number, a trade license, a VAT number, and, where applicable, registration certificates for imports and/or exports. The complete process can take around six weeks, though some intermediary services claim this can be done quicker.

Taxation

Corporate Income Tax in Bangladesh does not differentiate between foreign and domestic-owned businesses. The amount taxed depends on the nature of the company, but the current standard is 27.5%. Taxes must also be paid on capital gains, dividends, royalties, and interest. Several tax incentives are in place for foreign businesses operating in Bangladesh, including temporary exemptions for certain sectors, no import duties on export-oriented sectors, and avoidance agreements to prevent double taxation with around 30 partner states.

Labor Laws

The Bangladesh Labor Act 2006, Bangladesh Labor Rules 2015, and subsequent amendments guarantee rights to every worker, including a requirement for formal written contracts, a minimum wage of BDT 12500 per month (approx $100), and working hours limited to eight per day or 48 hours each week. Every business that expands into Bangladesh must ensure compliance with all local labor laws in every area of its operations. Global employment services such as an Employer of Record (EOR) or Professional Employer Organization (PEO) can be excellent partners for navigating this area of business successfully.

Benefits of Doing Business in Bangladesh

Bangladesh is one of the most attractive locations in South Asia for foreign investors to do business. This is evidenced by its inclusion in the Goldman Sachs N-11 list of upcoming nations set to make a significant impact on the world stage. Among the benefits of doing business in Bangladesh are:

Fast-growing Economy

Over the last decade, Bangladesh has seen the highest average GDP growth of any South Asian nation and is on course to become one of the fastest-growing economies in the world. Having recently earned the status of a middle-income country, Bangladesh is now targeting a rise to the upper-middle-income bracket by 2031. This rapid economic growth presents a wide range of immediate and long-term opportunities for businesses seeking to invest and do business in Bangladesh.

Full Ownership and Repatriation

Bangladesh has a long-standing policy of creating an attractive environment for foreign businesses. This includes allowing foreign investors to fully own businesses within the territory and unrestricted access to the domestic stock market. Business owners are also permitted to fully repatriate earnings and dividends so long as any relevant taxes are paid. In addition to this, individual expatriates working in Bangladesh are entitled to remit 75% of their post-tax income while resident in the country and the residual amount once they return home.

Incentives and Exemptions

In order to attract foreign investment and help businesses grow, Bangladesh has created a package of tax incentives and exemptions. These include a reduction or complete removal of income tax levies for businesses operating within a Bangladesh Special Economic Zone (BSEZ), which can last for up to 15 years for some industries. Individual expatriate workers are also able to benefit from working in Bangladesh with a personal tax exemption for up to three years in certain sectors.

Learn more about taxes in Bangladesh

Outsourcing Destination

Bangladesh is home to a young, literate, and highly educated labor force, which is growing every year. These workers are keen to grasp opportunities to step outside the country’s traditional industries and accept work with global companies operating in sectors such as information technology and business processing. This, combined with average wages significantly lower than the global average, leaves Bangladesh primed to become a major global outsourcing destination, following in the footsteps of countries like India and the Philippines.

Business Expansion Options in Bangladesh

Bangladesh is a welcoming nation for international businesses looking to expand into the region. There are several ways any foreign company can establish an entity in Bangladesh, such as:

Bangladesh Employer of Record (EOR)

This method is fast and efficient, making it perfect for companies that need to quickly deploy staff on the ground.

A Bangladesh EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to focus on their core activities. They may also provide additional services, such as talent acquisition and visa support.

Learn more about EOR in Bangladesh

Recruitment Agencies

Recruitment agencies in Bangladesh help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Bangladeshi labor laws.

For businesses looking to grow in Bangladesh, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

Learn more about Recruitment Agencies in Bangladesh

Bangladesh Professional Employer Organizations (PEO)

Whether a branch or an LLC, registering a business entity in Bangladesh can be a complex and time-consuming process. While this can be achieved independently, it is often far more efficient to work with a global business service such as a Bangladesh Professional Employer Organization (PEO).

Both of these organizations can assist with most elements of establishing an entity within Bangladesh, including hiring and human resource management. While they operate in a similar way, it should be noted that a PEO works as a co-employer with its clients, while an EOR will assume the role of sole employer and any liability for compliance that goes with it.

Partnering with a professional employer organization (PEO) allows companies to employ local staff in Bangladesh without the need to establish a legal entity. This approach is quicker and less expensive, making it ideal for businesses testing the Bangladesh market or those with limited operations.

PEOs handle administrative tasks and ensure that companies comply with Bangladesh regulations, reducing the complexity and risk associated with hiring local employees.

Learn more about PEO in Bangladesh

Subsidiary Incorporation

Lack of commercial restrictions makes incorporating a Limited Liability Company (LLC) in Bangladesh a favored choice for global businesses. This kind of business is permitted to operate with anywhere between two and 50 directors or shareholders, with a minimum share capital requirement of just BDT 1. There is also no restriction on the percentage of ownership, which can be in foreign hands. While any LLC will be subject to national regulations, it is considered a separate legal entity from any parent company and, therefore, able to carry out any kind of business while still profiting from association with the global brand identity.

Branch Registration

In comparison to an LLC subsidiary, establishing a branch of a parent company in Bangladesh is quick and simple. The guidelines which cover the operation of a branch office are also generally less strict. However, a branch must still be registered and can only operate in line with the activities of the wider business. In addition to this, a branch is not considered a separate legal identity, so the parent organization may find itself liable for any debts accrued by its Bangladesh operation.

Business Opportunities in Bangladesh

A fast-growing and ambitious economy that is well-connected both in South Asia and beyond, Bangladesh is an attractive proposition for global businesses looking to expand. Its government has a long-standing policy of encouraging foreign investment and has many initiatives and incentives in place to do this.

Bangladesh offers a range of promising business opportunities for investors and entrepreneurs, driven by its rapidly growing economy, strategic location, and competitive labor costs.

As one of the fastest-growing economies in the world, Bangladesh has been actively promoting foreign investment and developing its infrastructure to support businesses across various sectors. Some of the most significant opportunities include:

Business Opportunity	Reason
Ready-Made Garments (RMG)	Bangladesh is the world’s second-largest exporter of RMG, with a well-established supply chain, skilled workforce, and competitive production costs, making it an attractive destination for apparel brands and retailers.
Information Technology and Business Process Outsourcing (IT-BPO)	With its large, young, and educated workforce, Bangladesh presents opportunities for IT and BPO services, including software development, data processing, and customer support.
Agriculture and Food Processing	Bangladesh’s fertile land, diverse crop production, and large consumer market offer potential for investments in modern farming techniques, agro-processing, and food manufacturing.
Pharmaceuticals	Bangladesh’s growing pharmaceutical industry, supported by favorable government policies and a cost-effective manufacturing base, creates opportunities for investments in drug production, research, and development.
Infrastructure Development	The government’s focus on improving the country’s infrastructure, including roads, ports, and power generation, presents opportunities for construction companies, engineering firms, and project developers.

These opportunities align with Bangladesh’s vision of becoming a middle-income country by 2041, with a diversified economy and a thriving private sector. The government offers various incentives for businesses, such as tax holidays, duty-free import of machinery, and special economic zones.

Whether as an outsourcing destination or a nurturing environment for a wide range of industries, Bangladesh is an excellent place for international companies to do business.