When one thinks of business opportunities in Asia, powerhouses like China and India often dominate the conversation.
However, it might be time to explore an untapped gem – Bangladesh.
This South Asian country is quietly rising as an attractive destination for international businesses, particularly those involved in manufacturing.
Here’s why Bangladesh should be on your radar.
Tax incentives
Bangladesh offers a myriad of tax incentives aimed at attracting foreign investment.
For example:
- Reduced Corporate Income Tax rate for newly formed companies that have been operating between five and ten years.
- Income Tax deductions depending on the location of the business and the length of time they have operated within the country. 90 per cent deduction for one year, 80 per cent for two years, and so on.
- Exporters are also exempt from 50 per cent of their Income Tax and pay no duty on certain products, like tobacco.
- Public-Private Partnership (PPP) projects have a 100 per cent exemption on Income Tax.
To add a cherry on top, Bangladesh has signed Double Taxation Avoidance Agreements (DTAAs) with over 30 countries, including the UK.
This ensures that your earnings won’t be doubly taxed and takes a significant burden off your shoulders.
Manufacturing opportunities
It’s no secret that Bangladesh is a hub for textiles, but the manufacturing sector is not limited to garments alone.
Sectors like pharmaceuticals, automotive parts, and electronics are quickly growing whilst labour costs are among the lowest in Asia, allowing you to maximise profit margins.
Additionally, the country is investing in Special Economic Zones (SEZs) which offer tailored benefits, including reduced red tape and customs facilitation, for manufacturing enterprises.
The negatives
While the benefits are numerous, it’s crucial to be aware of the potential drawbacks of a move to Bangladesh.
For a start, the bureaucratic maze can be daunting, and even though efforts are being made to simplify procedures, you’ll need a good deal of patience and local guidance along with the advice of an international tax adviser.
In addition, intellectual property protection is still evolving, and enforcement mechanisms can be inconsistent.
Political stability is another concern and, while the situation has improved, it’s worth keeping an eye on the socio-political climate.
Infrastructure, too, has its limitations. Although there’s ongoing development in this area, power outages and logistical challenges are not uncommon.
Having said this, Bangladesh offers a compelling blend of tax incentives and manufacturing opportunities.
While there are challenges, they are not insurmountable, especially if you’re armed with the right information and local partnerships.
For many brave international entrepreneurs, Bangladesh’s captivating mix of culture and commerce along with its generous tax incentives, truly beckons.
Seize the opportunity to explore this burgeoning marketplace.
The tax benefits of the Bengal Tiger might just be the adventure you’ve been seeking for your business.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg & Co Limited. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.