Repatriation of Funds for Foreign Investors in Bangladesh

 

Bangladesh has established a clear legal framework and regulatory process for the repatriation of funds by foreign investors. This includes the repatriation of profits, dividends, capital gains, and other earnings. The process is governed by the Foreign Private Investment (Promotion and Protection) Act, 1980, alongside foreign exchange regulations issued by Bangladesh Bank. Below is a detailed guide to the repatriation process.

  1. Legal Framework

The repatriation of funds is protected under the Foreign Private Investment (Promotion and Protection) Act, 1980, which guarantees:

  • The right to repatriate invested capital, profits, dividends, and capital gains.
  • Protection against expropriation or nationalization without adequate compensation.
  • Equal treatment for foreign and local investors.

Additionally, foreign exchange regulations issued by Bangladesh Bank provide detailed guidelines on how funds can be repatriated.

 

  1. Types of Repatriation

Foreign investors can repatriate funds under various categories:

  1. Profits and Dividends: Post-tax earnings from investments can be remitted without major restrictions.
  2. Capital Gains: Sale proceeds from shares or fixed assets can be repatriated after fulfilling tax obligations.
  3. Royalties and Fees: Payments for technical know-how, consultancy services, or brand usage can be remitted with prior approval.
  4. Salary Income: Expatriates working in Bangladesh may remit up to 50% of their salary and 100% of leave salary through authorized dealer banks

 

  1. Step-by-Step Process for Repatriation

Step 1: Preparation

  • Open a Non-resident Investor’s Taka Account (NITA) with an authorized dealer (AD) bank to facilitate transactions related to investments.
  • Settle all relevant taxes (e.g., income tax, capital gains tax, withholding tax) with the National Board of Revenue (NBR).
  • Prepare necessary documentation, including audited financial statements, valuation reports, tax clearance certificates, and evidence of investment approval.

Step 2: Application

  • Submit an application for repatriation to Bangladesh Bank through an AD bank.
  • Include supporting documents such as:
    • Tax clearance certificates.
    • Professional valuation reports issued by certified accountants or merchant bankers licensed by the Bangladesh Securities and Exchange Commission (BSEC)

Step 3: Approval

  • For certain types of transactions (e.g., sale proceeds from shares held by non-residents), prior approval from Bangladesh Bank may not be required; post-facto reporting is sufficient.
  • Applications requiring approval are processed within specified timelines:
    • Dividend and profit remittance: 10 days.
    • Sale proceeds from shares: 15 days

Step 4: Execution

  • Once approved, AD banks execute the transaction and remit funds in foreign currency or Bangladeshi taka at Bangladesh Bank’s buying rate

 

  1. Sector-Specific Regulations

Some sectors have specific conditions for repatriation:

  • Export Processing Zones (EPZs): Sale proceeds from shares listed on stock exchanges can be repatriated without prior approval.
  • Non-listed companies: Share sales require valuation reports and post-facto reporting to Bangladesh Bank.

 

  1. Tax Compliance

Before repatriation:

  • All applicable taxes must be paid to NBR.
  • Tax exemptions may apply in certain cases, such as industries benefiting from tax holidays or reduced rates.

 

  1. Challenges in Repatriation

Despite clear guidelines, foreign investors may face challenges such as:

  • Bureaucratic delays in obtaining approvals from Bangladesh Bank or NBR
  • Complex documentation requirements for valuation reports and tax compliance
  • Sector-specific restrictions that may increase processing time.

 

  1. Legal Protections

Bangladesh provides robust legal protection for foreign investors during repatriation:

  1. The Foreign Private Investment Act, 1980, ensures fair treatment and safeguards against expropriation.
  2. Bilateral treaties prevent double taxation and facilitate smooth fund transfers.
  3. Disputes related to repatriation can be resolved under the Arbitration Act, 2001, which allows alternative dispute resolution mechanisms.

 

Conclusion

Bangladesh provides a transparent and investor-friendly framework for the repatriation of funds. By complying with the regulations set forth by Bangladesh Bank and NBR—such as opening NITA accounts, settling taxes, and submitting required documentation—foreign investors can efficiently remit their earnings abroad. While challenges like bureaucratic delays exist, recent efforts to simplify processes have made fund repatriation more accessible for foreign businesses operating in the country

How to Obtain a Foreign Loan in Bangladesh

To learn more about the Foreign Loan Process in Bangladesh, [visit here]

To learn more about Short Term Working Capital Loan Processing in Bangladesh, [visit here]

To Learn More about the Remittance of Dividends to Non-Resident Shareholders in Bangladesh, [visit here].

Contact Us

For more information on how LegalSeba.com can assist you with the transfer of shares and repatriation of sales proceeds for non-residents in Bangladesh, please contact us at:

📞 Phone/WhatsApp: +8801753718223

📧 Email: [email protected]

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Let LegalSeba LLP be your trusted partner in ensuring compliance and facilitating smooth exit and remittance processes in Bangladesh.