BANGLADESH LAW AND PRACTICE Contributed by: Shahwar Nizam, Tarannum Tasnim, Mahboob Aziz, Saif Bhuiyan, Farhan Kabir, Tanzim Ahmed and Rizvi Khan, DFDL Bangladesh
that purpose and also reported to Bangladesh Bank with the applicable form (Form C). Repatriation of Sales Proceeds There are also specific requirements for remittance of sale proceeds, depending on the valuation of the shares in the company and whether they are sold to a local person or entity in Bangladesh. As prescribed by Bangladesh Bank, the valuation can be based on the (i) net asset value, (ii) market value or (iii) discounted cash flow, depending on the nature of the company. Also, such valuation must be conducted by a mer - chant banker licensed by the BSEC, or by an experi - enced chartered accountant, and a valuation certifi - cate should be submitted by him or her to Bangladesh Bank for its approval before the shares are transferred. Dividends and Distributions Following a recommendation by its directors, a Bang - ladeshi company may, in a general meeting, declare dividends to its shareholders or pay interim dividends from time to time if such dividends are justified by the profits of the company. Under the GFET, certain steps must be taken in order to remit dividends (both final and interim) to non-resi - dent shareholders, although there is no need to obtain Bangladesh Bank approval in this regard. The author - ised dealer must ensure that the remittance is being made in Bangladeshi taka (BDT). The value in BDT is then converted into its equivalent in foreign currency using the conversion rate published by Bangladesh Bank on the date of remittance. All remittances in BDT from Bangladesh to a foreign country, credited to non-resident BDT accounts or convertible BDT accounts of foreign banks, constitute In addition to the foregoing, any remittance of roy - alty fees or technical know-how fees abroad requires prior approval from BIDA. In this regard, BIDA has the authority to determine the amount of royalty fees or technical know-how fees that can be payable or remit - ted abroad by the relevant company. outward remittances of foreign currency. Royalty and Technical Know-How Fees
In relation to land assets, please note that foreign per - sons or entities are not allowed to directly own land in Bangladesh. They can take lease (not perpetual) or rent over land only. However, certain legal struc - tures allow foreign nationals to indirectly enjoy either freehold or leasehold title to land. They may do so by incorporating 100% (or less than 100%) foreign- owned local companies in Bangladesh and having that foreign-owned local company own or lease land in Bangladesh. Foreigners can also own shares of a local company that owns land. Businesses operating in Bangladesh are subject to a range of taxes, including corporate income tax, value added tax (VAT), supplementary duties and customs duties. Corporate income tax rates vary based on the legal structure of companies and their business character - istics. For example, One Person Companies, private limited companies and branches of foreign compa - nies are subject to a 27.5% conditional tax rate, while public limited companies faces a tax rate of 22.5% to 27.5% depending on the proportion of shares from the paid-up capital floated in the IPO. 9. Tax 9.1 Taxation of Business Activities The aforementioned entities meeting certain condi - tions are entitled to a reduction in income tax. For example, the corporate income of companies will be reduced by 2.5% if all income is received through banking channels. Banks and financial institutions are subject to corpo - rate income tax ranging from 37.5% to 40%, contin - gent on their classification as public or private enti - ties. On the other hand, to promote exports, the GOB endows export-oriented companies with a range of benefits. Among others, this includes a reduced tax rate of 12% for companies on their income derived from export-related activities. There is no difference in corporate tax rates for foreign-owned companies in Bangladesh.
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