TRW & Co · UK–Bangladesh corridor
Repatriating Profits and Capital from Bangladesh to the UK
UK investors can repatriate profits from Bangladesh through an authorised dealer bank, usually as dividends, royalties or service fees. Dividends need no prior Bangladesh Bank approval if the paperwork is complete. Royalties and technical fees need an approved agreement. Tax is deducted at source, capped by the 1979 UK–Bangladesh treaty, and UK relief depends on the recipient.
Key pointBecause most dividends received by UK companies are exempt from corporation tax, Bangladeshi tax deducted from a dividend is usually a final cost, while tax deducted from royalties or interest can often be credited in the UK. The right mix of payments depends on both sides.
At a glance
Dividends via AD bank
Authorised dealer banks can remit final and interim dividends to non-resident shareholders without prior Bangladesh Bank approval, on an auditor-certified application and supporting documents.
Fees need approval
Royalty, technical know-how, technical assistance and franchise fees depend on an agreement approved by the Invest Bangladesh Authority, formerly BIDA, before money leaves.
Treaty withholding caps
The 1979 treaty caps Bangladesh tax at 10% on dividends to 10% corporate holders, 15% otherwise, 10% on royalties and 10% or 7.5% on interest.
Current rulebook
Bangladesh Bank FEPD-1 Circular No. 40 of 30 September 2026 consolidates the outward current-account remittance rules and is stated to be valid for one year.
Capital is separate
Share sale proceeds and liquidation surpluses follow separate disinvestment rules, so the record of how capital first entered Bangladesh decides how easily it leaves.
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The short answer
A UK parent or investor can repatriate profits from Bangladesh through the banking system, but each type of payment follows its own route. Dividends are remitted by the company's nominated authorised dealer bank without prior Bangladesh Bank approval, provided the paperwork is complete. Royalties, technical know-how and franchise fees depend on an agreement approved by the Invest Bangladesh Authority. Exit proceeds are a capital matter and take longer.
Tax runs alongside the exchange control rules. Bangladesh deducts tax at source on most outbound payments, and the 1979 UK–Bangladesh double taxation convention caps that deduction for UK residents who can prove their status. The UK then decides how much credit, if any, the recipient receives.
As of October 2026, the main operating rules sit in Bangladesh Bank's consolidated FEPD-1 Circular No. 40, dated 30 September 2026, which replaced the 2025 consolidated circular for outward current-account remittances. Investors who plan the structure before money goes in usually find it much easier to repatriate profits from Bangladesh later.
Most delays have nothing to do with permission. They come from an auditor's certificate, a tax assessment or an unapproved agreement that should have been dealt with a year earlier.
The legal framework: exchange control, investment approval and tax
Three bodies of rules apply whenever you repatriate profits from Bangladesh. Knowing which one governs a payment tells you who must sign it off.
Foreign exchange regulation
Bangladesh still operates exchange control under the Foreign Exchange Regulation Act, 1947. Bangladesh Bank exercises its powers through authorised dealer (AD) banks, which process most transactions under general authority. Bangladesh Bank publishes these instructions in its Guidelines for Foreign Exchange Transactions and in consolidated circulars. The current outward remittance rules are set out in FEPD-1 Circular No. 40 of 30 September 2026, which states that it is valid for one year and must be read with any later instructions.
The Invest Bangladesh Authority
The circular refers to the Invest Bangladesh Act, 2026 and to the Invest Bangladesh Authority, described as the former Bangladesh Investment Development Authority (BIDA). It also refers to the Authority's export and domestic processing areas, which the circular identifies with the former economic zones authority. Section 27 of the 2026 Act, as summarised by Bangladesh Bank, requires approved industrial enterprises to apply to the Authority before paying royalty, technical knowledge, technical assistance or franchise fees to foreign persons.
Tax in both countries
Bangladesh taxes outbound dividends, royalties, fees and interest by deduction at source under its domestic income tax law. The UK–Bangladesh double taxation convention, signed in 1979 and in force since 1980, limits those deductions for residents of the UK. On the UK side, the recipient's own tax position decides whether Bangladesh tax is creditable. Our guide to the UK Bangladesh double tax treaty explains the treaty in detail.
Ways to repatriate profits from Bangladesh compared
Each payment type has a different approver, a different evidence pack and a different tax treatment. The table summarises the position under Circular No. 40 and the treaty, as of October 2026.
| Payment | Exchange control route | Key limits or conditions | Treaty cap on Bangladesh tax |
|---|---|---|---|
| Dividends (final or interim) | Nominated AD bank, no prior Bangladesh Bank approval | Paid out of normal business profit or remittable reserves, after past losses and tax | 10% for a company controlling at least 10% of voting power; 15% otherwise |
| Branch profits | Nominated AD bank, post facto check by Bangladesh Bank | Additions to fixed assets and certain property gains are deducted | Taxed as business profits of the permanent establishment |
| Royalty, know-how and technical assistance fees | Agreement approved by the Invest Bangladesh Authority, then AD bank | Amounts above the Authority's permitted level need specific approval | 10% on royalties as defined in the treaty |
| Services bought from the parent group | AD bank under general authority | Subsidiary over 50% owned, services not available locally, capped at 10% of net profit | Depends on how the payment is characterised |
| Training, consultancy and similar fees | AD bank under general authority | Up to 1% of prior-year sales or USD 100,000, whichever is higher; not for banks and financial institutions | Depends on characterisation |
| Interest on shareholder loans | Governed by Bangladesh Bank's separate foreign borrowing rules | Check the borrowing rules before the loan is drawn | 10%, or 7.5% for a bank or financial institution |
Dividends: the usual way to repatriate profits from Bangladesh
For a subsidiary, dividends are the cleanest route. Circular No. 40 allows AD banks to remit final and interim dividends to non-resident shareholders on an application in the prescribed form, certified by the company's auditors and filed in triplicate.
What the AD bank will ask for
- An attested copy of the certificate of incorporation (needed only once).
- Audited accounts for the year to which the dividend relates.
- An auditor-certified copy of the board resolution declaring the dividend.
- A list of the non-resident shareholders entitled to it.
- An auditor's certificate that tax payable by the non-resident shareholders on the dividend has been deducted.
- An auditor's certificate that the company's tax provision covers all past and current liabilities, and the final assessment order when issued.
- An undertaking to bring back any amount later found to be ineligible.
Each company must use one nominated AD bank and tell the Foreign Exchange Investment Department of Bangladesh Bank in advance. The bank checks that the profit came from normal trading or from remittable past reserves, that previous losses and tax liabilities have been absorbed, and that any government cash subsidy has been deducted. The amount is approved in Taka and converted at the rate on the day of remittance, so currency risk stays with the investor until then.
Keeping dividends in Bangladesh
Declared dividends can also be credited to the shareholder's foreign currency account in Bangladesh or reinvested in shares of the same or another Bangladeshi company. A reinvestment is treated as a fresh inward remittance, and the investee must report the share issue through its AD bank within 14 days. That matters because a properly recorded investment is the foundation for any later disinvestment.
Royalties, technical fees and franchise fees
Licensing intellectual property or know-how to a Bangladeshi affiliate is a common way to repatriate profits from Bangladesh, but it is also the most regulated. The agreement, not the individual payment, is the starting point.
According to the Authority's published guidance on the repatriation of royalty, technical know-how and franchise fees, the agreement must be approved before any remittance. For a project in commercial operation, annual payments up to 6% of the previous year's sales, excluding VAT, may then be remitted without a fresh approval each year; more needs prior approval. Advance payments need approval and a bank guarantee. Large franchise fees may be spread over three years.
Enterprises in the Authority's export processing areas and in Hi-Tech Parks have a separate allowance under Circular No. 40. They may remit these fees without prior permission up to 6% of the cost of imported machinery for new projects, or 6% of the previous year's sales for ongoing concerns.
Bangladesh Bank allows group service charges only where the services are not available locally and the price is competitive, and the circular expressly mentions transfer pricing. Draft intercompany agreements so that each payment is clearly a royalty, a service fee or a reimbursement. A fee that looks like a disguised dividend can be refused by the bank and challenged by the tax authority.
Step-by-step: how to repatriate profits from Bangladesh
- Map the flows. List every payment the UK side expects: dividends, royalties, service charges, interest and eventual exit proceeds. Identify which rule and which approver applies to each.
- Bring capital in properly. Make sure equity and loans arrive through the banking channel and are reported. Repatriation of capital later depends on that record.
- Get agreements approved. Submit technology, licence and franchise agreements to the Invest Bangladesh Authority before payments start, and keep the approval letter with the AD bank.
- Nominate one AD bank. Notify Bangladesh Bank of the nominated bank for dividends and keep the same branch for royalty and fee remittances.
- Close the accounts and tax. Finalise the audit, the tax provision and the auditor's certificates before the board declares a dividend.
- Apply treaty rates. Give the Bangladeshi payer an HMRC certificate of residence and any forms the payer's tax adviser requires, so tax is deducted at the treaty rate rather than the domestic rate.
- Remit and record. The AD bank files Form TM and reports the payment. Keep a full set of papers, because Bangladesh Bank checks some remittances after payment and can demand repayment of any excess.
- Claim UK relief. Report the receipt in the UK and claim credit for Bangladesh tax where the UK charges tax on the same income.
Withholding tax and UK credit
Under the treaty, as summarised in HMRC's Double Taxation Relief Manual, Bangladesh may tax dividends paid to a UK resident at no more than 10% where the beneficial owner is a company controlling at least 10% of the voting power, and 15% in other cases. Royalties are capped at 10%. Interest is capped at 10%, or 7.5% where it is received by a bank or other financial institution, provided the UK recipient is taxable on it.
The UK end matters just as much. Most dividends received by UK companies fall within the distribution exemption in Part 9A of the Corporation Tax Act 2009. Where a dividend is exempt, there is no UK tax for Bangladesh tax to be credited against, so the Bangladeshi deduction is usually a final cost. Royalties and interest are generally taxable in the UK, so credit relief is more valuable for them, subject to UK rules limiting credit to the UK tax on the same income.
The treaty has no separate article for fees for technical services. Whether a technical fee is a royalty, business profit or something else affects the Bangladesh tax deducted. Settle that question with advisers in both countries before signing the agreement.
Illustrative scenario
This scenario is illustrative only and does not describe any real client or matter.
A UK manufacturer owns 80% of a Bangladeshi subsidiary and licenses its process technology to it. After two profitable years, the UK board wants a dividend and the accrued licence fees. The licence agreement was never submitted to the Invest Bangladesh Authority, and the subsidiary's tax assessments for one year are still open.
The dividend can proceed once the auditors certify that the tax provision is adequate, but the AD bank cannot remit the licence fees until the agreement is approved. The UK parent also learns that the dividend will probably be exempt from UK corporation tax, so the Bangladeshi deduction is a real cost, whereas tax deducted from the licence fees can be credited against UK tax on that income. The group gets the agreement approved, pays the dividend first, and adjusts its future mix of dividends and fees with that tax trade-off in mind.
Risks and common mistakes
Paying fees under an unapproved agreement
AD banks will not remit royalties, technical know-how, technical assistance or franchise fees unless the Authority's conditions are met. If the subsidiary has been accruing fees for years under an agreement that was never approved, the backlog may be hard to remit, and any later application has to explain the gap. Submit agreements for approval before the first invoice is raised, and keep renewals and amendments approved too. A change of fee basis, licensor or term can need a fresh approval.
Declaring a dividend the bank cannot remit
A dividend is remittable only if it comes out of profit that the AD bank accepts as remittable. Accumulated losses must be absorbed first, government cash subsidies are deducted, and the tax provision must cover open years. Boards sometimes declare a dividend from reserves that include revaluation gains or property sale profits, which are treated differently. Ask the auditors to run the remittable profit calculation before the board meeting, not after.
Losing treaty rates for lack of paperwork
Treaty caps apply only to a beneficial owner resident in the UK, and a Bangladeshi payer will normally deduct the domestic rate unless it is satisfied that the treaty applies. Obtain an HMRC certificate of residence for the relevant year in good time. Where a UK holding company sits above the subsidiary, check that it has real substance and is the beneficial owner. A conduit company with no activity is a weak foundation for a treaty claim.
Ignoring the UK side of the calculation
Groups often focus on the Bangladesh deduction and forget the UK result. Because most UK corporate dividends are exempt, unrelieved Bangladesh tax on dividends is a real cost. Royalties and interest, by contrast, are taxable in the UK, so credit may make them cheaper overall. UK transfer pricing and controlled foreign company rules can also apply to the group's arrangements. Model the after-tax return in both countries before choosing the mix.
Capital repatriation and exit
Bringing back the investment itself is different from paying out profit. Sale proceeds of shares, capital reductions and liquidation surpluses are capital-account items, dealt with under Bangladesh Bank's separate rules on foreign investment and disinvestment. Expect the bank to look closely at how the original investment entered Bangladesh, how it was reported and how the exit price was set. Plan for a longer timetable than for a dividend.
The treaty helps here. Under its capital gains article, gains on shares in a company whose assets are not mainly immovable property are taxable only in the seller's state of residence. Shares in land-rich companies are treated differently, and Bangladesh's domestic rules on deduction at source on share transfers still need to be managed in practice. Our guides to foreign ownership rules in Bangladesh and to choosing a Bangladesh subsidiary or branch explain how the choice of vehicle affects exit.
Checklist and next steps
- Confirm that every inward investment was received through the banking channel and reported.
- Nominate one AD bank and notify Bangladesh Bank.
- Have licence, technology and franchise agreements approved by the Invest Bangladesh Authority before payments start.
- Agree the remittable profit calculation with the auditors before any dividend is declared.
- Obtain an HMRC certificate of residence each year and check beneficial ownership.
- Model UK tax on each income stream, including the effect of the dividend exemption.
- Keep a complete remittance file for Bangladesh Bank's post facto checks.
TRW & Co's London office works with our Dhaka team on UK–Bangladesh structures, from the initial investment in Bangladesh to trade and finance flows and UK tax. If you need to repatriate profits from Bangladesh, or want to structure a new investment so that profits and capital can come home, contact our team or see our wider UK–Bangladesh practice.
Frequently asked questions
01Do I need Bangladesh Bank approval to receive dividends from my Bangladeshi company?
Not usually. Under Bangladesh Bank FEPD-1 Circular No. 40 of 30 September 2026, authorised dealer banks may remit final and interim dividends to non-resident shareholders without prior Bangladesh Bank approval. The company applies through its nominated bank with audited accounts, a certified board resolution, auditor certificates on tax deduction and tax provision, a list of non-resident shareholders and an undertaking. The bank checks that the profit is remittable. Prior approval is still needed for older pre-liberation dividends.
02How much tax does Bangladesh deduct from dividends paid to a UK company?
Bangladesh deducts tax under its domestic law, but the UK–Bangladesh treaty caps the rate for a UK-resident beneficial owner. The cap is 10% where the owner is a company controlling at least 10% of the voting power in the payer, and 15% in other cases. To benefit, the UK company normally gives the payer an HMRC certificate of residence. Because most UK corporate dividends are exempt from UK corporation tax, that Bangladeshi tax is often not creditable in the UK.
03Can a Bangladeshi subsidiary pay royalties to its UK parent?
Yes, but the licence or technology agreement must satisfy the Invest Bangladesh Authority, formerly BIDA. Bangladesh Bank says the Invest Bangladesh Act, 2026 requires approved industrial enterprises to apply to the Authority for royalty, technical fee and franchise fee payments. The Authority’s published guidance describes approval of the agreement first, with annual payments within a percentage of prior-year sales then remittable through the bank. Treaty withholding on royalties is capped at 10%.
04What is the Invest Bangladesh Authority?
Bangladesh Bank’s 2026 consolidated circular describes the Invest Bangladesh Authority as the former Bangladesh Investment Development Authority (BIDA). It also refers to the Authority’s export and domestic processing areas, which the circular links to the former economic zones authority. For repatriation purposes, the Authority is the body that approves royalty, technical know-how, technical assistance and franchise fee arrangements under the Invest Bangladesh Act, 2026. Older documents and guidance still use the BIDA name, so expect both terms in practice.
05How long does it take to repatriate profits from Bangladesh?
There is no fixed statutory timetable. Once accounts are audited, the tax provision is certified and the board has declared a dividend, the nominated authorised dealer bank can usually process a complete application without referring it to Bangladesh Bank. Delays mostly come from incomplete auditor certificates, open tax assessments, unapproved fee agreements or questions about how the original investment was recorded. Capital repatriation on exit takes longer because it falls under separate disinvestment rules.
06Can I take my original investment out of Bangladesh when I sell?
Generally yes, if the investment came in through the banking channel and was properly reported. Sale proceeds, capital reductions and liquidation surpluses are capital-account items handled under Bangladesh Bank’s separate foreign investment and disinvestment rules, which focus on the investment record and the exit valuation. Under the treaty, gains on shares in a company that is not land-rich are taxable only in the seller’s state of residence, although Bangladesh’s domestic withholding procedures still need to be managed.
Sources and official materials
- Bangladesh Bank FEPD-1 Circular No. 40 (30 September 2026) — Consolidated rules on outward current-account remittances, including dividends and fees
- UK–Bangladesh tax treaties (GOV.UK) — The 1979 double taxation convention and its effective dates
- HMRC DT3102: Bangladesh treaty summary — Treaty withholding rates on dividends, interest and royalties
- Invest Bangladesh Authority (BIDA): repatriation of royalty and technical fees — Approval process and limits for royalty, know-how and franchise fees
- Get a certificate of residence (HMRC) — How UK residents prove residence to claim treaty rates
- Corporation Tax Act 2009, Part 9A — UK exemption for company distributions received
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.