Revised procedure for remittance of Profit & Residual Balance by Foreign Companies & Firms in Bangladesh.

Sakib SikderManaging Partner, Jural Acuity

In a move to facilitate foreign investment, Bangladesh Bank has recently through FEID Circular Letter No 2. dated 19.09.2019, has decided to remove the pre-approval requirements for remittance profit from Bangladesh. Bangladesh Bank has also eased the requirements for remitting the residual balance of foreign firms and branch office.

A. It has been decided that henceforth all entities including branches of foreign firms and companies established in Bangladesh with permission from competent authorities for business/profit motive and operating in compliance with reporting formalities under Section 18 B(1) of the Foreign Exchange Regulation Act, 1947 are allowed to remit profits to their head offices abroad through their nominated Authorized Dealer Banks without prior approval of Bangladesh Bank in terms of paragraph 28, chapter 10 of Guidelines on Foreign Exchange Transactions Volume 1. Authorized Dealers are required to submit applications for post-facto checking within 30 days of profit remittance along with relevant documents to the Foreign Exchange Investment Department, Bangladesh Bank, Head Office, Dhaka.

B. Bangladesh Bank considers applications submitted by Authorized for outward remittances of residual balances after closing branch office, liaison office or representative office or any other places of business operating in Bangladesh and for a refund of borrowing availed from their head offices. But it is observed that in most of such cases applications are submitted without proper supporting, resulting in unavoidable delays in disposing of the issues. To bring ease in the approval process for such outward remittances, ADs are advised to apply to Foreign Exchange Investment Department of Bangladesh Bank, Head Office with all relevant documents, mutatis mutandis, as mentioned in Annexure-A of the Circular.

The requirements as per Annexure A are as follows-

1. Approval letter from competent authorities for closing office in Bangladesh;
2. Approval of competent authorities waiving restrictions (if any) on outward remittance by
local operation of foreign companies;
3. Board resolution of the head office regarding the decision to close an office in Bangladesh;
4. Audited Financial Statements for the last 03 (three) years;
5. Auditor’s certificate:
i) indicating the calculation procedure through which the remittable amount has
been arrived at supported by audited financial statements of the applicant, and
indicating the manner of disposal of assets;
ii) confirming that all liabilities in Bangladesh including arrears of gratuity and
other benefits to employees etc., of the office have been either fully met or
adequately provided for; and
iii) confirming that no income accruing from sources outside Bangladesh (including proceeds of exports) has remained un-repatriated to Bangladesh.
6. Income tax clearance certificate of the office;
7. Confirmation from the applicant/Head Office that no legal proceedings in any Court in Bangladesh are pending and there is no legal impediment to the remittance;
8. Work permit cancellation and income tax clearance certificate of the foreign expatriate(s)
working in the office (if any);
9. Encashment certificates for the funds received from a head office abroad;
10. Public notice for office closing;
11. Document in support of final office rent settlement;
12. Bank statement of the office (last one year);
13. If the branch/liaison /representative offices availed any local loan, then CIB certificate;
14. For project work, Award/Bills from work order giver;
15. Approval letter from competent authorities for borrowing from Head Office abroad;
16. Any other document(s), specified by Bangladesh Bank while granting approval.