Foreign Exchange Policy Department
Bangladesh Bank
Head Office
Dhaka
[Link]
FE Circular No.12 Date: February 19, 2025
All Authorized Dealers in
Foreign Exchange in Bangladesh
Dear Sirs,
Outward remittances on account of service payments
by subsidiaries of foreign companies
Authorized Dealers (ADs) are permitted to effect outward remittances for transactions
under current account as prescribed in the Guidelines for Foreign Exchange Transactions- 2018
(GFET), Vol-1. Bangladesh Bank considers requests for outward remittance on current
transactions not specifically included in GFET and its subsequent circulars upon establishing the
bonafides of the expenses.
02. Service trade is a complex transaction since it is executed in non-physical form.
Purchases of recurrent services by subsidiaries from or through overseas parent/group firms or
their associates comparable to those available locally enable related party transactions. It is
observed that resident companies operating in Bangladesh as subsidiaries of foreign companies
avail different services from their parents/group companies abroad. In view of the situation and
to facilitate transactions between subsidiaries and parent/group companies, it has been decided
that ADs may allow remittances on behalf of local subsidiaries against services from or through
parent/group companies or their associates provided that:
(a) The services are not locally available;
(b) The subsidiaries are controlled by parent/group companies by holding shares
exceeding 50 percent;
(c) Gross remittable amount (before deduction of source tax) shall not exceed 10
percent of net profit in an accounting year.
03. Before allowing remittances, ADs shall observe following instructions:
(a) ADs shall obtain underlying contracts including invoices;
(b) The price of services is competitive;
(c) The remittance is subject to compliance of taxes regulations like deduction and
payment of applicable source tax and VAT, including transfer pricing;
(d) Periodical payments shall be admissible based on reasonable estimation of profit
certified by auditors;
(e) Undertaking from remitter-subsidiaries is to be received to the effect that
necessary adjustments shall be made in the following year in case of excess payment
due to non-achievement of profit as per estimation.
Cont’d to page -2
-2-
04. The facility under this authorization will be inadmissible for remittances requiring
permission from competent authorities; and this will be mutually exclusive for transactions with
parent/group companies if granted generally or specifically.
05. The facility shall be available through a branch of an AD designated by the
applicant. For any intended change in this respect, the relevant file shall be transferred direct to
the concerned new AD branch on written request by the applicant.
06. As usual, ADs shall report the transactions to Bangladesh Bank in the online reporting
module and usual monthly returns/statements.
07. In case of service payments requiring more than the limit set above, subsidiaries should
send applications, through their designated ADs, to Bangladesh Bank accompanied by following
documents:
(a) Draft copies of agreements or Memorandum of Understanding (MoU) to be signed
between subsidiaries and parent/group companies abroad;
(b) Documents as evidence of price competitiveness of services;
(c) Documents or statement(s) justifying the unavoidable necessity of obtaining services
from parent/group companies abroad or that such services cannot be provided by local
service providers;
(d) Certificate from auditors regarding sources tax and VAT, base of calculation of
source tax and obligatory of taxes with reference to relevant provisions of tax laws, rules
and regulations.
Please bring the contents of this circular to the notice of all concerned.
Yours faithfully,
(Monoar Uddin Ahmed)
Director (FEPD)
Phone: 9530119