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Repatriation of Foreign Investment in Bangladesh: A Comprehensive Guide

Table of Contents

Understanding Repatriation Rights for Foreign Investors in Bangladesh
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Foreign investors in Bangladesh are legally entitled to repatriate their investments, including profits, dividends, and the original capital, subject to adherence to the country’s regulatory framework. This right is a cornerstone of Bangladesh’s efforts to attract “Foreign Direct Investment” (FDI) and is primarily governed by key national legislation and overseen by regulatory authorities. The Government of Bangladesh generally maintains a policy of allowing free repatriation of invested capital, profits, and dividends, provided the investor complies with the existing foreign exchange regulations and other relevant laws of the land.

I. Legal Framework and Governing Bodies#

The repatriation process is underpinned by a robust legal framework and managed by specific regulatory entities.

A. Key Legislation
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  1. The Foreign Private Investment (Promotion and Protection) Act, 1980: This foundational law provides a guarantee for the repatriation of invested capital, including capital gains, and all post-tax profits and dividends. It ensures that foreign investors receive fair and equitable treatment and offers protection against nationalisation and expropriation.
  2. The Foreign Exchange Regulation Act, 1947 (FERA): FERA, along with the Guidelines for Foreign Exchange Transactions - GFET issued by the Bangladesh Bank, outlines the operational procedures for foreign exchange transactions, including the repatriation of funds. All repatriation must comply with the provisions of FERA.

B. Key Regulatory Bodies
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  1. Bangladesh Bank (BB): As the central bank of Bangladesh, the BB plays a crucial regulatory role. It sets guidelines, issues Foreign Exchange (FE) Circulars, and, in some instances, requires prior approval for certain repatriation transactions. Its Foreign Exchange Investment Department (FEID) is often the approving authority for various repatriation requests.
  2. Bangladesh Investment Development Authority (BIDA): BIDA is the principal private investment promotion and facilitation agency in Bangladesh. While the Bangladesh Bank handles most direct repatriation approvals concerning foreign exchange, BIDA’s approval may be required in specific instances, such as for the remittance of royalties and technical fees.
  3. Authorised Dealer (AD) Banks: These are commercial banks specifically licenced by the Bangladesh Bank to deal in foreign exchange. They act as liaison between Bangladesh Bank and their customers. The actual process of repatriation is carried out through AD banks. Foreign investors typically need to open accounts with AD banks to facilitate their investment and subsequent repatriation. AD banks are responsible for scrutinising documentation and ensuring compliance with regulations before executing remittances.

II. Key Avenues and Specific Conditions for Repatriation
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Foreign investors can repatriate their funds from Bangladesh through several channels, each with specific conditions:

A. Profits and Dividends
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  • Dividends: Remittance of dividend income (both final and interim) to non-resident shareholders generally does not require prior approval from the Bangladesh Bank and can be done through an AD bank. The application usually needs to be in a prescribed form and certified by an auditor. Dividends can also be credited to the foreign currency (FC) accounts of non-resident investors in Bangladesh, and these funds can be reinvested or remitted.
  • Profits: Branches of foreign companies, including banks and insurance companies incorporated in Bangladesh, can remit their post-tax profits to their head offices through an AD. However, branch offices (other than banks and insurance companies) typically require permission from the Bangladesh Bank for remitting profits.

B. Sale Proceeds of Shares/Securities
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  • Publicly Listed Companies: Prior approval from the Bangladesh Bank is generally not necessary for remitting the sale proceeds of securities held by non-residents in companies listed on the stock exchange(s). The repatriable amount, however, must not exceed the market price of the securities prevailing on the date of sale.
  • Private/Unlisted Public Limited Companies: Repatriation of sale proceeds from non-resident equity investment in private limited companies or public limited companies not listed on the stock exchange usually requires prior approval from the FEID of the Bangladesh Bank if the amount exceed a certain amount. The valuation of shares is a critical aspect. A valuation report by a BSEC-licenced merchant banker or a chartered accountant listed by the Bangladesh Bank/BSEC is often mandatory, especially if the deal value exceeds certain thresholds. The Bangladesh Bank generally accepts the fair value based on a combination of valuation approaches (Net Asset Value, Market Value, Discounted Cash Flow).

C. Capital Repatriation upon Winding Up/Liquidation
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In the event of winding up or liquidation of a company (whether voluntary or by court order), foreign shareholders can repatriate their share of the residual money after all liabilities in Bangladesh (including taxes and other statutory payments) have been fully paid. This process requires prior permission from the FEID of the Bangladesh Bank. Necessary documentation, such as court orders (if applicable), a certificate from the liquidator confirming payment of all liabilities, audited financial statements, and tax clearance certificates, must be submitted.

D. Royalties and Technical Know-How/Assistance Fees
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Industrial enterprises can enter into agreements with foreign entities for the payment of royalties and technical assistance fees. These remittances are permissible, often without prior BIDA approval, if they fall within prescribed limits (e.g., a certain percentage of the previous year’s sales or the cost of imported machinery for new projects). Agreements exceeding these limits, or for advance payments, usually require prior BIDA approval. The agreements themselves often need to be registered with BIDA.

E. Repatriation by Foreign Employees
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Foreign nationals employed in Bangladesh (with necessary approvals from authorities like BIDA and relevant ministries) are generally permitted to remit a significant portion of their monthly salary (e.g., up to 80% after deductions for local living expenses, taxes, and other contributions) and their savings and retirement benefits through an AD bank.

III. General Process for Repatriation
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While specific requirements can vary based on the nature of the investment and the amount being repatriated, the general process involves:

  1. Ensuring Compliance: The enterprise in which the investment was made must be compliant with all local laws and regulations, including tax obligations under the Income Tax Act, 2023 (or prevailing tax laws). All due taxes must be paid before repatriation.
  2. Application to Authorised Dealer (AD) Bank: The investor, or the enterprise on their behalf, applies to their AD bank for the repatriation of funds.
  3. Documentation Requirements (Illustrative List): Investors need to provide relevant documentation to their AD bank. This typically includes:
    • Audited financial statements of the enterprise.
    • Proof of payment of applicable taxes (e.g., tax clearance certificates from the National Board of Revenue - NBR).
    • Board resolution approving the dividend or other repatriation.
    • Encashment certificates as proof of inward remittance of the investment.
    • Approval letters from BIDA, Bangladesh Bank, Registrar of Joint Stock Companies and Firms (RJSC), or other relevant authorities, if applicable.
    • In cases of disinvestment, sale agreements and valuation certificates (as detailed above).
    • Certificates from chartered accountants/auditors, as required.
    • Copies of relevant agreements (e.g., for royalties, technical fees).
    • For liquidation, court orders (if applicable) and a certificate from the liquidator.
  4. Scrutiny and Approval by AD Bank: The AD bank scrutinises the application and supporting documents to ensure compliance with FERA guidelines and Bangladesh Bank regulations. For certain transactions or amounts exceeding specific thresholds, the AD bank may need to seek prior approval from the Bangladesh Bank.
  5. Remittance: Once all requirements are met and necessary approvals are obtained, the AD bank will remit the funds to the foreign investor’s designated overseas bank account.

IV. Important Considerations for Investors
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  • Prior Approval from Bangladesh Bank: While many routine repatriations (like profits and dividends) can be handled by AD banks directly, larger amounts or specific types of repatriation (e.g., proceeds from the sale of shares in non-listed companies to non-residents, significant capital repatriation, or transactions outside standard parameters) might require prior approval from the Bangladesh Bank.
  • Taxation: All repatriated funds are subject to applicable Bangladeshi taxes (e.g., tax on dividends, capital gains tax). It is crucial to ensure all tax liabilities are settled before initiating repatriation and to obtain necessary tax clearance certificates.
  • Reporting Requirements: Both the investor and the AD bank have reporting obligations to the Bangladesh Bank regarding foreign exchange transactions, often through online reporting systems.
  • Initial Investment: It is crucial for foreign investors to ensure that their initial investment was made through proper banking channels (i.e., remitted into Bangladesh and encashed through an AD bank) and duly reported to the Bangladesh Bank, as this facilitates the repatriation process.
  • Record Keeping: Maintaining clear, accurate, and comprehensive records of all investments, earnings, tax payments, and regulatory approvals is essential.
  • Professional Advice: Given the complexities of foreign exchange regulations and tax laws, seeking professional advice from legal and financial experts familiar with Bangladeshi regulations is highly recommended to navigate the repatriation process smoothly and ensure compliance.

In summary, Bangladesh offers a structured framework for the repatriation of foreign investments, underpinned by legal protections and facilitated through the banking system under the supervision of the Bangladesh Bank. Investors are advised to maintain thorough documentation and work closely with their Authorised Dealer banks and legal/financial advisors to ensure a smooth and compliant repatriation process.

Key Contact

For assistance with navigating the repatriation process for your investments in Bangladesh, please reach out to: