Regulatory Framework for Profit Remittance
Statutory Compliance Requirements
Before an AD bank can process a remittance, the company must ensure compliance with the Companies Act, 1994 regarding the declaration of dividends and the Income Tax Act, 2023 regarding Withholding Tax (WHT) obligations.
| Requirement | Statutory Reference | Compliance Mandate |
|---|---|---|
| Dividend Declaration | Companies Act 1994, Sch-I | Resolution by Board and Approval in AGM. |
| Tax Deduction (WHT) | Income Tax Act 2023, Sec 117 | Deduction at source (20% for companies, 10-15% for individuals/DTAA). |
| Remittance Authority | FERA 1947, Sec 20 | General permission via AD Banks under GFET Vol-1, Ch 10. |
| Audit Requirement | Companies Act 1994, Sec 212 | Audited Financial Statements by a Chartered Accountant. |
The Repatriation Workflow
Authorized Dealer (AD) Bank Due Diligence
Under the Guidelines for Foreign Exchange Transactions (GFET), the AD bank must verify the following prior to executing the transfer:
- Audited Financials: Verification that the dividend is paid out of current year's profit or accumulated retained earnings as per Section 212 of the Companies Act 1994.
- Tax Clearance: Proof of payment of Withholding Tax (WHT) under Section 117 of the Income Tax Act 2023 and issuance of a Tax Clearance Certificate (TCC) where applicable.
- Form TM: Completion of the 'Form TM' (Transfer of Money) as prescribed by Bangladesh Bank.
- RJSC Filings: Evidence of filing Schedule X (Annual Summary) and Form 15 with the Registrar of Joint Stock Companies and Firms.
Consult Barrister Liton Asaduzzaman Sarkar
For complex cross-border profit repatriation and tax structuring under DTAA, contact our chambers.
Schedule Legal ConsultationFrequently Asked Questions
What is the tax rate on dividend remittance to a foreign company?
Under Section 117 of the Income Tax Act 2023, the standard withholding tax rate for dividends paid to a non-resident company is 20%, unless a lower rate is applicable under a Double Taxation Avoidance Agreement (DTAA).
Is prior Bangladesh Bank permission required for dividend repatriation?
No. As per Chapter 10, Section II of the GFET Vol-1 (issued under FERA 1947), Authorized Dealer banks are empowered to remit dividends to non-resident shareholders without prior Bangladesh Bank approval, provided all documentary requirements and tax obligations are met.
Can dividends be paid out of revaluation reserves?
No. According to standard accounting practices and Bangladesh Bank circulars, dividends must be paid out of realized profits. Unrealized gains from asset revaluation cannot be used for dividend distribution or repatriation.
◆ Related Statutory Guides & Practice Insights
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