A foreign company entering Bangladesh has three practical structures available, and they are not interchangeable. The choice determines what the entity may lawfully earn, how it is taxed, what approvals it needs before it can open a bank account, and how difficult it will be to exit.
The common and costly error is to open a liaison office because it is the simplest to establish, then to start invoicing through it. A liaison office is not permitted to earn income in Bangladesh. Correcting that position afterwards means unwinding the structure and dealing with the tax consequences of revenue that should never have been booked there.
The three structures
| Liaison office | Branch office | Subsidiary company | |
|---|---|---|---|
| What it is | A representative presence of the foreign company | The foreign company operating directly in Bangladesh | A Bangladeshi company owned by the foreign parent |
| May earn income in Bangladesh | No | Yes, within the scope of its approval | Yes |
| Separate legal entity | No | No — parent is directly liable | Yes — liability is ring-fenced |
| Primary approval | Invest Bangladesh permission | Invest Bangladesh permission | RJSC incorporation; Invest Bangladesh registration for the investment |
| Funded by | Inward remittance from the parent | Inward remittance from the parent | Share capital, shareholder loan or local borrowing |
| Typical use | Market research, liaison, quality control for a parent sourcing from Bangladesh | A defined contract or project with a limited life | Any ongoing commercial operation |
| Exit | Closure with approval and tax clearance | Closure with approval and tax clearance | Share sale, or members' winding up |
A simplified comparison. Sector-specific regimes — banking, insurance, telecoms, power — add their own licensing requirements on top.
How to choose
- If the business will invoice Bangladeshi customers on an ongoing basis, it will almost always be a subsidiary. Everything else is a temporary answer.
- If the work is one defined contract — an EPC package, a supply and installation scope, a consultancy mandate — a branch may be the better structure, because it avoids the cost of forming and later winding up a company.
- If the purpose is genuinely to represent, co-ordinate or inspect, and no income will arise in Bangladesh, a liaison office is appropriate and is the lightest option.
- If the operation will sit inside an economic zone or an export processing zone, the zone authority's regime governs and the analysis changes — the zone entity is usually the right structure and carries its own incentive package.
- If a local partner is involved, the question becomes a joint venture one, and the shareholders' agreement matters more than the entity form.
Ownership restrictions
Most sectors in Bangladesh are open to full foreign ownership. A small number are reserved or restricted, and several — banking, insurance, telecommunications, power generation, freight forwarding and others — require sectoral licences that carry their own conditions on shareholding, local participation and board composition. The sector analysis should be done before the entity is chosen, not after.
General information about Bangladeshi law, current at the date of publication. Not legal advice, and not a substitute for advice on your own facts.