TCF Monthly Newsletter - July 2023
Tokyo Consulting Firm Bangladesh
Committed to Contribute to the Society, Through our Clients
Foreign Currency Account in Bangladesh
Bangladesh Bank has granted permission to the banks to operate several kinds of foreign currency and convertible taka accounts. The rules established by Bangladesh Bank for creating and maintaining these accounts. Besides, persons ordinarily residing in Bangladesh may open and maintain accounts in FC titled’ Resident Foreign Currency Deposit (RFCD)’ accounts with foreign exchange brought in at the time of their return from travel abroad. Related information for opening and maintaining of such accounts are described below in brief:
Foreign Currency (FC) Accounts may be opened in the following foreign currencies:
Who can open an FC account?
Note:?A Private Limited Company registered under RJSC and operating outside EZ/EPZ cannot open a FC account.
Conditions, terms, and details of several types of FC accounts:
Private Foreign Currency (FC) Account:
Private FC Account may be opened in our Authorized Dealer branches by
a.???????Bangladeshi nationals working/residing abroad;
b.???????Foreign nationals residing abroad or in Bangladesh;
c.???????Foreign missions and their expatriate employees;
d.???????Foreign firms registered abroad and operating in Bangladesh or abroad;
e.???????Bangladeshi nationals working in foreign/international organizations in Bangladesh with entitlement to receive salary in foreign currency.
FC Accounts of Diplomatic Bonded Warehouse
ADs may open foreign currency accounts in the names of the Diplomatic Bonded Warehouse (duty-free shops) licenced by the Customs Authorities on the following conditions:
a.?????Convertible foreign currency (notes and coins, travelers’ cheques, drafts, cheques or credit card settlements) received only on account of sale of merchandise may be credited to these accounts.
b.?????Foreign exchange may be remitted abroad only for the purpose of import of merchandise by the bonded warehouse. For the same purpose foreign exchange may also be transferred from such accounts to foreign currency accounts maintained with other ADs.
FC accounts of local and joint venture contracting firms
Foreign currency accounts in the names of local and joint venture contracting firms employed to execute projects by foreign donors/international donor agencies may also be opened by the Ads as per terms of the
a.?????approved contract with the government authority without prior permission of Bangladesh Bank.
b.?????Only foreign exchange received from the donors/donor agencies to meet expenses of the project can be credited to these accounts.
FC Accounts of resident Bangladesh nationals working with foreign/international bodies
Foreign currency accounts may be opened:
a.?????In the names of resident Bangladesh nationals working with foreign/international organizations operating in Bangladesh provided their salary is paid in foreign currency.
b.?????Such account may be credited only with the foreign currency portion of the salary and debited for all approved current transactions like cost of travel, education for children, treatment etc. Local disbursements may also be made freely in Taka from such foreign currency accounts.
c.?????Foreign currency accounts may also be credited with consultancy fees/honoraria received in foreign currency by the above-mentioned category of residents, debits to such accounts being subject to the same conditions as mentioned above.
Non-Resident Foreign Currency Deposit (NFCD) Account:
NFCD account may be opened in our Authorized Dealer branches by:
a.?????Bangladeshis working/residing abroad
b.?????Bangladeshis having dual nationality residing abroad
c.?????Bangladeshi nationals serving with missions of Bangladesh in foreign countries
d.?????Officers/staff of the government/semi-government organizations/nationalized banks and employees of corporate body posted abroad or deputed with international and regional agencies in foreign countries against foreign currency remitted through banking channel or brought in cash.
Resident Foreign Currency Deposit (RFCD) Account:
?a.?????Persons ordinarily resident in Bangladesh may open RFCD account with foreign exchange brought in at the time of their returns from travel abroad.
b.?????Resident persons may open this account at any time after their return to Bangladesh.
Exporters' Retention Quota (ERQ) Account:
Retention quota account may also be opened and maintained in the names of deemed exporters for supplying inputs against inland back-to-back letter of credit denominated in foreign currency.
ADs are obliged to meticulous compliance with the followings:
a.?????The total amount credited to the direct exporter's retention quota account together with foreign exchange paid to the deemed exporter against the supply of input must not exceed the net repatriated.
b.?????FOB export value of the direct exporter; and The foreign exchange shall be credited to the retention quota account of the deemed exporter only after settlement of the amount against back-to-back LC for deemed export.
Foreign currency accounts for the EPZ companies:
The following procedures shall apply to the release of foreign exchange to the enterprises against exports made from the EPZs:
a.?????100%; 80% and 75% percent of repatriated export proceeds respectively of Type A, B and C and industrial unit in EPZ may be retained in FC account in the name of the unit with an AD in Bangladesh.
b.?????Balances in the FC account may freely be used to meet all foreign payment obligations including import payment obligations of the unit and payment obligations in foreign exchange to BEPZA.
Conclusion:?Based on the demand and needs Individuals and companies are able to open FC accounts in Bangladesh. There are also other FC accounts such as Foreign currency accounts for Initial Public Offerings (IPO); Foreign currency accounts for shipbuilders (exporters); Foreign currency accounts of shipping companies, airlines and freight forwarders, Special FC accounts can be opened by taking permission of BB with showing specific and evidence.
Reference:
Foreign Exchange Transactions (GFET) 2018 Chapter 13[Foreign Exchange Guideline Vol 1]
Revisional power of the Commissioner
If any assessee wants to apply for a revision of the submitted income tax return. They can apply to the Commissioner. And the commissioner has the authority, upon receiving an application from the taxpayer, to request the records of any proceeding conducted under this Ordinance where an order has been issued by a subordinate authority. The Commissioner is empowered to conduct or cause an inquiry to be conducted and, subject to the provisions of this Ordinance, can pass an appropriate order on the matter, provided it does not harm the interests of the taxpayer, in accordance with their discretion.
Timeline for application:
In the case of revising an order passed by a subordinate authority under this Ordinance, the taxpayer must apply within sixty days from the date of communication of the order, unless the Commissioner grants an extension based on reasonable grounds that prevented the taxpayer from applying within the specified sixty-day period.
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Limitation of Power of Commissioner:
However, the Commissioner cannot exercise their power in certain situations. Firstly, if an appeal against the order can be made to the Appellate Joint Commissioner, the Commissioner (Appeals), or the Appellate Tribunal, and the time limit for such an appeal has not expired, or if the taxpayer has not waived their right to appeal. Secondly, if the order is under consideration for appeal before the Appellate Joint Commissioner or if an appeal has already been lodged with the Commissioner (Appeals) or the Appellate Tribunal.
Conditional payment of dispute money and application fee:
Certain conditions must be met to file an application under subsection (1). The application must be accompanied by a fee of two hundred takas, and the portion of the tax that is not in dispute must be paid. The term "undisputed portion of the tax" refers to the tax amount payable as per section 74 of this Ordinance.
Consequences of Rejection by Commissioner:
It is important to note that an order by the Commissioner refusing to intervene should not be construed as an order detrimental to the taxpayer.
Furthermore, notwithstanding any provision in this Ordinance, if the Commissioner fails to issue an order on an application for revision within sixty days from the date of filing the application, the application shall be deemed as allowed.
Authority of revision:
In this section, it is clarified that the Appellate Joint Commissioner of Taxes is considered a subordinate authority to the Commissioner, and the Deputy Commissioner of Taxes, whose order is under revision, is subordinate to the Appellate Joint Commissioner of Taxes.
Reference:
Income Tax Ordinance-1984 (U/s:121A).
Bangladesh Labour Rules 2015 Amendment
The government has amended the Bangladesh Labour Rules 2015. The government issued a gazette of amended Labour Rules on September 1, 2022 bringing changes in 99 rules and repealing two rules. By this newsletter, we would like to enlighten some important areas of labor regulations which are affected by the recent amendment of Bangladesh Labour Rules 2015.
Resolution of Dispute:
In the establishment, some disputes may arise between the employees and employers or employees and employees, or employers and employers. For remedy of any dishonest labor conduct by employer or any worker working in factory or establishment, a petition has to be forwarded to Director General or any officer authorized by him within 55 (Fifty-Five) days of occurrence of such conduct. The Director General of labor or any officer authorized him shall resolve it within 55 (Fifty-Five) days of getting such petition.
Training on law:
For building up well industrial relation and establishing the rightful demand of employees and employer, the authority will arrange the training on relevant law. For this purpose:
(1) The Industrial Relations Institutes established by the Government or empowered by the Government shall conduct training courses on this Act.
(2) The owner of an organization or any officer of an organization designated by him and workers can participate in such training course if invited by the Industrial Relations Education Center.
(3) Industrial Relations Institutions may conduct any type of training course on laws and regulations for duration of 4 (four) weeks, 1 (one) week, 2 (two) days, 1 (one) day or for any other period determined by the Director General in consultation with the owners and workers’ representatives concerned for conducting the training courses.
Reference:
Bangladesh Labour Rules (Amended): 366, 366a
One Person Company (OPC) Establishment in Bangladesh
A new chapter in the business world of Bangladesh has started by creating an opportunity to establish One Person Company (OPC). The 'Companies (2nd Amendment) Act, 2020' was passed in Bangladesh Parliament, keeping provision for the formation of one-person companies (OPC), with only one natural shareholder. This created opportunities for those who don't want to work with partners or who can't form private or public limited firms because they can't find acceptable partners.
What is One Person Company (OPC)?
One Person Company [OPC] means and includes a company whose shareholder is merely a natural person (as inserted in by proposed Section 2 (BB) of sub-section 1 of section 2 of the Companies Act, 1994).
Any natural resident and non-resident (Local or Foreigner) person may incorporate a One Person Company (OPC) for any lawful object by signing his/her name into the Memorandum as the only shareholder. A natural person can only form a One Person Company. [Section 392(B) (1) (2) of the Companies Act, 1994]
Required Documents and Information for Registration of OPC-
Share Capital –
As per section 392 C, the paid-up capital of an OPC shall be a minimum of Tk. 25 Lakhs and maximum Tk. 5 Crores and the annual turnover of the previous financial year is at least Tk. 1 Crore and at most Tk. 50 Crores.
If the paid-up capital of OPC exceeds the amount specified above and the annual turnover exceeds the amount specified above then subject to the necessary terms and conditions, a natural person can transfer OPC to a private limited company or a public limited company.
Company Structure-
A natural person may form a One Person Company (OPC) for any purpose, and if he so desires, he may sign in the memorandum of in accordance with the provisions of this law on registration - as per section 392B.
Procedure of OPC registration-
The rules followed for One Person Company registration is the same as the private limited company - as per section 392D.
Director-
The sole shareholder of OPC shall be its Director as well as manager, company secretary and other employees may be appointed to manage One Person Company (OPC) - as per section 392E.
Yearly Meeting-
The Director of OPC will call at least one board of directors meeting every half year - as per section 392F.
Amendment-
If any changes are made in the Memorandum and Article of Association of the OPC, the Company will notify about such changes to the Registrar of Joint Stock Company (RJSC) - as per section 392G.
Transfer of shares to the natural person-
All shares of the OPC can be transferred to any other individuals with natural beings subject to the provision of section 38 - as per section 392H.
The share transferor must provide the list of the relevant Director, the Statement of Annual Capital, and the Transfer Deed with an affidavit to the Registrar of Joint Stock Companies & Firms (RJSC). The transferor must be physically present at the RJSC to validate the signature's legitimacy. Suppose the transferor is a foreign person or lives abroad. In that case, the relevant papers and affidavits must be provided to RJSC after being certified by the authorized official of the relevant embassy.
Balance sheet-
For OPC, within 160 days of the end of a financial year, its financial statements must be submitted to the Registrar and it must be signed by the Director. - As per section 392I.
It is a good thing that Bangladesh has this new movement. The beneficial development will aid in the expansion of the Bangladeshi economy. Many entrepreneurs in Bangladesh will generate profit from the services offered by a One Person Company (OPC). Furthermore, the conditions are simple and easy if you want to establish a company in Bangladesh with very little capital investment and are an entrepreneur.
Reference:
The Companies (2nd Amendment) Act, 2020
Disclaimer:
*** The Newsletter has been written based on the rules and regulations, laws, and ordinances set by the Government from time to time, so sometimes the newsletter can be found outdated as laws and regulations are regularly updated. Please feel free to contact us if you found any outdated information and we will try to publish the latest newsletter on those topics.?