Navigating Bangladesh Bank’s Outward Remittance Guidelines: FEPD-1 Circular No. 40 Compliance Roadmap for Foreign Investors and Local Subsidiaries (2026)
By Mostafizur Rahman
Issued on September 30, 2026, Bangladesh Bank’s Foreign Exchange Policy Department released its updated master regulatory framework governing all outward remittances on current account transactions (other than imports and transportation services). This consolidated directive officially supersedes the previous year's guidelines, bringing all governing rules into a single point of reference with a mandated one-year validity period.
Designed to provide operational predictability for foreign investors, multinational corporations, technology firms, and local subsidiaries, the framework comprehensively consolidates provisions across profit repatriation, dividend distribution, head office administrative expenses, specialized tech/e-commerce allocations, and related-party parent-subsidiary service payments.
For these entities, capital repatriation is the ultimate benchmark of operational success. However, executing these transactions through Authorized Dealer (AD) banks requires absolute precision. While AD banks retain the authority to process routine transactions directly without prior central bank intervention, a single miscalculation in statutory deductions, an undocumented fixed asset addition, or a missed reporting timeline can freeze capital, trigger central bank audits, and damage corporate standing.
Mastering these parameters is critical. This comprehensive legal guide provides corporate counsel, chief financial officers (CFOs), and compliance officers with a definitive, end-to-end roadmap for seamless, audit-proof, and legally compliant cross-border fund transfers under the September 2026 rules
1. Profit Remittance by Branches of Foreign Firms (Non-Financial Institutions)
Foreign companies operating registered branches in Bangladesh can remit operational profits abroad via their nominated AD bank without securing prior explicit approval from Bangladesh Bank, provided the application satisfies rigorous statutory and documentary thresholds.
A. Mandatory Documentation Checklist
Submissions to the nominated AD must be comprehensive and include:
· Audited balance sheets and profit & loss accounts for local business operations.
· Consolidated audited financial statements of the parent company/head office for the corresponding period.
· Year-wise head office account reconciliations.
· Bangladesh tax compliance evidence: either an auditor certificate confirming that tax provisions are sufficient to meet all local liabilities, or stamped final tax assessment orders.
· Particulars of additions to local fixed assets and the specific source of financing.
· Details of outstanding local borrowings and valid government permission letters for conducting business in Bangladesh.
B. Statutory Computation & Deduction Rules
ADs must evaluate applications against strict adjustment parameters:
· Past Losses: All accumulated past losses must be fully adjusted against profit & loss or general reserve accounts.
· Fixed Asset Additions: Costs of fixed assets, furniture, office equipment, and vehicles acquired during the year are deducted from net profit unless financed out of depreciation, annual disposals, or non-repatriable funds received from abroad.
· Asset Sale Profits: Profits from selling small fixed assets or normal business investments in stocks, shares, and securities are admissible remittable items. However, profits from the sale of immovable property (land, buildings, etc.) must be deducted from remittable profits unless prior Bangladesh Bank approval is secured alongside auditor market-value certificates, book-value proofs, certified sale agreements, and capital-gains tax assessment papers.
· Subsidies: Government cash subsidies granted to the firm must be deducted from divisible profits.
· Sterling Tea Estate Companies: Accounts must be prepared and applied for in Taka, accompanied by specialized auditor certifications verifying adherence to Memorandum and Articles of Association bounds, consistent accounting principles, and adequate tax provisioning.
C. Post-Facto Compliance Timeline
Once the AD determines the Taka equivalent and effects the foreign exchange remittance, original documentation must be forwarded to the Foreign Exchange Investment Department (FEID) at Bangladesh Bank Head Office for post-facto checking within one month.
2. Profit Remittance by Foreign Banks, Insurers, and Financial Institutions
Foreign banks and financial institutions operating in Bangladesh, as well as foreign insurance companies remitting the shareholders' portion of profits, may process remittances through their nominated ADs without prior central bank approval.
· Essential Documentation: Requires local audited financials, tax assessment/provision certificates, fixed asset depreciation statements, unrealized income certificates, Actuary valuation reports and Insurance Development and Regulatory Authority (IDRA) approval (for insurers), and auditor certificates verifying capital, reserve, and classified loan provisioning adequacy.
· Mandatory Deductions: Profit pools must be filtered down by tax provisions, fixed asset additions (net of depreciation/foreign funding), immovable property sales profits exceeding BDT 10,000, unrealized interest on adversely classified assets, Bangladesh Bank inspection-detected irregular income, capital/provision shortfalls, and past accumulated losses.
· Repatriation Undertaking: Applicants must furnish an explicit undertaking that any excess remittance identified during Bangladesh Bank’s post-facto audit will be immediately repatriated on demand. Attested documents must be submitted to FEID within one month of remittance.
3. Head Office Expenses for Foreign Banking Branches
Foreign banking branches sharing global management, administration, and strategic expenses incurred by their head offices may remit these allocations through ADs under strict conditions:
· Caps & Tax Compliance: Gross remittable amounts (pre-source tax) cannot exceed limits prescribed under domestic income tax regulations. Remittances are strictly subject to source tax and VAT deduction.
· Auditor Standards & Disclosure: Allocations must be supported by global-standard head office auditor certificates, cannot be remitted before financial statement closure, and require separate disclosure in audited financial statements.
· Strict Reporting Window: A complete document set and an excess-repatriation undertaking must be submitted to FEID within 15 days of the remittance.
4. Remittance of Dividends to Non-Resident Shareholders
Both final and interim dividends can be remitted to non-resident shareholders via ADs using prescribed Appendix-9 applications in triplicate.
· Verification & Audit Shield: Applications require attested incorporation certificates, audited financials, auditor-certified board resolutions, non-resident shareholder lists, tax deduction certificates, and auditor certificates confirming that tax provisions cover both current and prior unassessed years. Previous losses and government subsidies must be fully deducted.
· FC Account Credits & Reinvestment: Dividends may be credited to local Foreign Currency (FC) accounts (treated as outward remittances via Form TM) or reinvested in local companies. Reinvestments require investee companies to report through designated ADs to FEID and the Statistics Department within 14 days of share issuance.
· Pre-Liberation Dividends: Pre-liberation dividend remittances require prior written approval from Bangladesh Bank via Form TM. Dividend warrants may be freely exported if shares were funded through formal banking channels or NITA accounts.
5. Sector-Specific & Institutional Remittance Facilities
To support digital transformation and specialized industries, Bangladesh Bank permits streamlined annual outward remittances without prior central bank approval:
· IT and Software Firms (BASIS Members): Authorized to remit up to USD 40,000 per calendar year for software registration, domain/hosting fees, server maintenance, account verification, and digital marketing. Requires beneficiary invoices, tax compliance, and a BASIS recommendation letter. Within this limit, ADs may issue refillable international cards for up to USD 8,000 to a nominated official.
· E-Commerce Enterprises (e-CAB Members): Member firms can remit up to USD 10,000 annually for bona-fide business expenses via traditional banking or card channels (capped at USD 2,000 per refillable card).
· Software Maintenance & Cloud Infrastructure: ADs may process cloud service and software license fees upon verifying legitimate licenses, valid agreements, invoices, tax/VAT compliance, and unutilized-fund repatriation undertakings.
· Cross-Border Power Purchase: Facilitates transmission payments for government-approved cross-border power projects through the national grid, subject to valid government-approved contracts, authenticated supplier invoices, energy receipt confirmation certificates from state entities, source tax/VAT deductions, and IMP Form procedures.
6. Related-Party Service Payments by Foreign Subsidiaries (The 10% Cap)
Local subsidiaries of foreign parent companies (holding over 50% shares) procuring recurrent, non-locally available services from overseas parent or group entities must operate within strict regulatory guardrails:
· The 10% Net Profit Ceiling: Gross remittable amounts (before source tax deduction) cannot exceed 10% of net profit in an accounting year.
· Rigorous AD Scrutiny: ADs must examine underlying contracts and invoices, verify price competitiveness, enforce source tax, VAT, and transfer pricing regulations, and obtain auditor-certified profit estimations accompanied by an overpayment adjustment undertaking for the subsequent year.
· Exceeding the Limit: Service payments requiring amounts above the 10% threshold require a formal application submitted through designated ADs to Bangladesh Bank, supported by draft MoUs, price competitiveness evidence, necessity justifications, and auditor tax certificates.
Conclusion: Securing Your Enterprise Cross-Border Flows
Bangladesh Bank’s updated September 30, 2026 circular establishes a clear, structured framework empowering multinational corporations, foreign investors, and local subsidiaries to seamlessly repatriate profits, dividends, and institutional service payments. While Authorized Dealer (AD) banks afford the flexibility of processing routine transactions without prior central bank intervention, strict adherence to mandatory documentation, tax withholding compliance, and rigorous post-facto reporting timelines remains non-negotiable.
To ensure your cross-border transactions, tax structuring, and corporate filings remain 100% audit-proof and fully aligned with the latest regulatory standards, consult our corporate legal team at Jural Acuity today.
How Jural Acuity Can Help
At Jural Acuity, our corporate, tax, and foreign exchange law practitioners offer deep insights into Bangladesh’s evolving regulatory landscape. We provide strategic counsel on structuring outward remittances, optimizing profit and dividend repatriations, managing related-party service payments, defending clients in central bank or tax audits, and representing corporate interests across all regulatory bodies, appellate tribunals, and the Supreme Court of Bangladesh.
Whether you are resolving complex compliance bottlenecks with Authorized Dealer banks or securing post-facto approvals from Bangladesh Bank, connect with our expert legal team today to safeguard your enterprise’s cross-border financial flows.
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