Article
3 min read
Author
Anja Simic
Published
August 12, 2021
Last Update
June 25, 2024
Table of Contents
Sole proprietorship in Bangladesh
Registering a sole proprietorship in Bangladesh
Trade license
Tax registration for a sole proprietorship in Bangladesh
Corporate tax
Bangladesh, located in South Asia, is the world's 39th largest economy in terms of market exchange rates and the 29th largest in purchasing power parity, which ranks second in South Asia. Bangladesh is also one of the world's fastest-growing economies and one of the fastest-growing middle-income countries. With that said, this country is a good choice for starting a business.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
A sole proprietorship also referred to as a sole trader, is an unincorporated business with just one owner who pays personal income tax on profits earned from the business. It is the easiest and least expensive business structure to set up.
In the past two decades, the sole proprietorship concept has gained popularity. This is is a social mindset that is applicable in any kind of business or setting. Sole proprietorships can be beneficial for developing economies due to the government, civil society, private sector, and the public-private partnership approaches.
If you intend to start your own business in Bangladesh, the following paragraphs will help you understand the process step-by-step.
Firstly, you need approval for your business name from The Registrar of Joint Stock Companies and Firms (RJSC). You should create an account on this site to start with the online business name registration. The RJSC office will check the database and issue name clearance if it does not closely match or resemble any of the already existing names. It will be valid for the next 180 days. You will have to apply for registration within this timeline. The fee for registering a business name is BDT 600.00 for each of the proposed names.
Here are the documentation requirements to complete the registration process:
Other requirements:
All documents should be submitted to RJSC.
Keep in mind the fees to RJSC depend on the authorized capital of the business. There could also occur other out-of-pocket expenses and professional fees involved.
Businesses obtain a trade license from the City Corporation, by filling an application at the nearest City Corporation. The following documents must accompany the application form:
To start business operations, every company must register for taxes at the appropriate taxation authority (Deputy Commission of Taxes of Company Circle, Zonal Taxation Department) under the National Board of Revenue (NBR) and obtain a tax identification number (TIN). Obtaining a TIN can be done online within a day.
Application for Value Added Tax (VAT) registration is submitted online. The following documents must accompany the VAT application:
Proprietorship Trade License
Two photographs of the business owner
National ID or Passport copy of the business owner
IRC or ERC if the proprietorship is importing and exporting
Article and Memorandum
TIN Certificate
VAT return is required to be submitted quarterly and is dealt with by Tax and VAT department. The standard rate of VAT in Bangladesh is 15%. A standard tax year is calculated between July 1st to June 30th.
Resident entities are taxed on worldwide business income; non-residents are taxed only on Bangladesh-source income. The corporate tax rate is 22.5%. Which becomes 25% if the following conditions are not met:
All businesses with a gross income above BDT 5 million are subject to an alternative minimum tax of 0.6% on gross receipts if the amount due is higher than corporation tax.
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