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How to Setup Trading Business in Bangladesh - A Comprehensive Guide

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A trading business (also known as a merchandising business) buys and sells goods or assets at an agreed-upon price. These businesses can sell goods for consumer, business, or government use.

But how do you set up a trading business in Bangladesh? To set up a trading business, collect an application form for company registration, submit it with other required documents, wait until the licensing supervisor verifies the documents, pay the fees and collect the license from RSJC.

Keep reading till the end to learn about the legal issues that may arise while setting up or running a trading business in Bangladesh.

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What is a Trading Business in Bangladesh?

Trading Business in Bangladesh

A trading business is a particular type of business that involves buying and selling goods or services for profits. A trading business can range from a retailer to a multinational company.

In Bangladesh, it’s hard to categorize a business as a trading business. It can be a retailer or even an international corporation.

For a clearer understanding of various trading businesses, consider the following list.

    • Retailers: These trading businesses directly sell goods or services to the general public.
    • Wholesalers: These types of businesses sell merchandise at a reduced price to other companies.
    • General Traders: These traders sell various products instead of focusing on a particular product.
  • Trading Companies: These companies buy large product stock and sell it to customers directly.

Moreover, there are several other trading businesses in Bangladesh, such as sole proprietorship, stock trading, foreign trade, and forex trading.

Is Trading Business Legal in Bangladesh?

Trading Business in Bangladesh

Yes, trading businesses are legal in Bangladesh, both domestically and internationally. However, some restrictions regulate how much one can trade and what can be traded.

Let’s discuss the restrictions on trading businesses.

Authorized Traders

Only licensed banks and financial institutions have permission to trade forex and CFDs (Contract for Difference).

To be able to trade forex or CFDs in Bangladesh, you must trade through banks or permitted financial organizations.

Tax Implication

The Tax Authority of Bangladesh (National Board of Revenue) may apply a capital gains tax to the profits earned from a trading business.

Restrictions on Instruments

Because of the gambling nature of Binary options trading, it is not permitted in Bangladesh.

Exotic Trade

Not every trader is allowed to transact and hold exotic trade in Bangladesh. Only the permitted merchants can transact and hold exotic trade.

Special Activities

You must acquire the required licenses from the Bangladesh Bank for special trade-related activities such as money changing services.

In addition, the Bangladesh government discouraged trading on margin. It restricts the traders from borrowing money from anyone to trade.

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How to Setup a Trading Business in Bangladesh

Trading Business in Bangladesh

How to start trading business in BangladeshSetting up a trading business in Bangladesh is straightforward. The process may vary depending on the nature of the business and its type.

Consider the subsequent discussion about setting up a trading business in Bangladesh.


Trading Business in Bangladesh

Depending on the business, you must acquire several licenses before starting a trading business in Bangladesh.

The only requirement for a sole proprietorship business is a TL (Trade License). You can apply for a trade license in the City Corporation office near you.

In case you’re not a part of the City Corporation, you can apply for the TL in the Municipal Corporation or Union Parishad.

Not only for a sole proprietorship, but a trade license is also a must-have license or primary requirement for all types of businesses.

Partnership business is another popular form of trading business.

In a partnership business, there can be two to twenty partners. The partners signed an agreement on a non-judicial stamp paper (Government-issued).

A partnership trading business must be registered by RJSC (Registrar of Joint Stock of Companies) to run the business in Bangladesh.

For companies, there are two primary options: private limited company and public limited company.

Usually, private companies raise the funds from shareholders, and public companies raise the funds by selling shares to the general public.

The company first needs to get the Name Clearance Certificate from RJSC.

Then, the companies must draft Articles and Memorandum of Association (AoA & MoA) and provide identities to the RSJC to incorporate the business.

However, if any of the private company’s shareholders are foreigners, you must open a temporary bank account and remit the authorized capital to the bank.

Moreover, foreign companies are also allowed to open a Branch Office or Liaison Office in Bangladesh.

Private or Public company incorporation will need several other documents and licenses.

For instance, a Tax Identification Number and Value Added Tax (VAT) registration is required to incorporate or set up a trading business in Bangladesh.

Depending on the business, the company may need some other licenses.

If you’re in the export and import business, you must apply and collect the Import Registration Certificate and Export Registration Certificate.

To get these licenses, you must apply to the Office of the Chief Controller of Imports and Exports.

Additionally, if you’re in the trading business of the Telecommunications Sector, you have to collect a license from the Bangladesh Telecommunication Regulatory Commission (BTRC).

And for trading companies that are in manufacturing, a Fire License and Environment Clearance Certificate are the must-have licenses.


Trading Business in Bangladesh

The registration process highly depends on the nature and type of the trading business. Following are the straightforward methods of setting up a trading business in Bangladesh.

    • Get the Name Clearance Certificate.
    • Open a temporary bank account if any of the shareholders are foreigners.
    • Finalize the required forms (MoA, AoA, registration forms).
    • Submit the forms to RJSC.
    • Register with tax authorities.
    • Get a trade license from the City Corporation.
    • Register for VAT.
  • Collect other permits and licenses.

The registration process can take 4 – 6 weeks. However, the actual registration time can vary depending on the type of trading business.


Trading Business in Bangladesh

According to the income tax law of Bangladesh, the general tax rate is approximately 32.5%.

A limited company or trading business must report several taxations to the NBR. Following is the list of all possible taxation.

    • Monthly tax deduction statement.
    • Half yearly withholding tax statement.
    • Yearly statement of tax return submission of employees.
    • Yearly statement related to salary disbursed.
    • Quarterly advance tax deposition.
    • Yearly tax return submission.
    • Monthly VAT return.

You must pay all the above-mentioned taxes in order to be able to operate a trading company in Bangladesh.

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What are the Legal Issues of Trading Business?

Trading Business in Bangladesh

Due to the huge scope of the trading business, several legal issues may arise from different sectors, such as labor law, bank law, contract law, etc.

So, I will cover the most relevant legal issues that you may face while starting a new trading business in Bangladesh.

Law of Contract

A trading business needs multiple contracts with shareholders, appropriate authorities, and often with the bank.

Due to numerous contacts, legal issues may arise while opening or running a trading business.

Most contract-related legal issues are regulated by the Contract Act (1872). Contracts that are written on a stamp are regulated by the Stamp Act (1899).

Bank-Related Laws

All trading business transactions are highly dependent on the banks. These transactions are made under the Bank Company Act 1991.

A trading company may have to deal with various types of bank accounts for different purposes.

On the contrary, businesses often take loads from financial institutions or banks to expand their business scope. These transitions can raise multiple legal issues.

Under the Financial Institutions Act 1993, some non-banking financial institutions invest money in start-up businesses.

Similarly, most import and export transitions occur through the Letter of Credit. Foreign exchange regulations also come into play in these intercountry transactions.

However, Bangladesh Bank directly regulates these transactions under the Bangladesh Bank Foreign Exchange Guidelines.

Bangladesh Bank tracks foreign transactions under the Money Laundering Prevention Act 2012.

If any illegal or suspicious transitions are found, it is considered a severe offense. The Bangladesh Bank will take appropriate action against the accused trading business.

Labor Law

The government of Bangladesh has strict labor laws regulated by the Department of Inspection for Factories and Establishments.

Several issues may arise while operating a trading business in BD.

For instance, you may face leaves, benefits, wages, employment contracts, or provident funds issues.

According to the Bangladesh Labour Act 2006, you must obey the following rules for running a trading business in Bangladesh.

    • Working hours.
    • Total annual leaves.
    • Employment benefits.
    • Trade union issues.
    • Employee’s welfare.
    • Termination benefits.

Immigration and Work Permit

Bangladesh allows 100% ownership of the company by foreigners in some sectors and some exceptional cases.

This brings a ton of investments to the country. Besides, the investors are often required to obtain residency in Bangladesh.

As a result, issues related to immigration and work permits may arise. In such scenarios, seeking professional help is strongly recommended.

Is Forex Trading Legal in Bangladesh?

Trading Business in Bangladesh

Yes, forex trading businesses are legal in Bangladesh. Though there is no official legalization from the government, it is also not banned by the authorities.

The BSEC (Bangladesh Securities and Exchange Commission) primarily regulates all forex trade businesses and everything that crosses the same path.

Only the traders authorized by Bangladesh Bank have permission to purchase and sell foreign currencies.

Bangladesh Bank has specific regulations and guidelines determining which individuals or businesses can engage in forex trading.

So, what are the guidelines set by Bangladesh Bank for forex trading?

Bangladesh Bank has several instructions for forex trading. Some of the most important ones are listed below.

    • Only the financial institutions and banks with a license can trade forex.
    • Leverage and margin trading are prohibited.
    • The ADs (Authorized Dealers) must keep records and submit the returns and statements periodically.
    • The ADs must ensure the transaction is not designed to contravene anything. The dealers will ensure that by collaborating with the person responsible for the transaction.
    • New exporters can travel abroad (for business) only when they have an annual foreign exchange quota of $6,000.
    • For all cases, you must submit an application to the Authorized dealers or Bangladesh Bank.

You can also check the guidelines for foreign exchange transactions by Bangladesh Bank for a more apparent understanding.

Final Thoughts

Setting up a new trading business in Bangladesh requires only a few documents and a little fee needs to be paid. The challenge is to avoid the legal issues related to the trading business.

However, if you cautiously perform all the aforementioned methods, you will get your trading business license within 2-4 weeks.

For further assistance, you can take dedicated assistance from Law Advisor BD.

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Bangladesh doesn’t have any specific laws about online trading. However, to trade currencies, the service provider or the trader must have a money changing license from the Bangladesh Bank.

Yes, trading crypto-currencies in Bangladesh is unlawful. Bangladesh Bank has warned the people of Bangladesh about buying, selling, or using cryptocurrencies. Bangladesh has banned all crypto-currencies, including Bitcoin, Ethereum, and Tether.

Quotes is a Seychelles-based company owned by Awesomo Ltd. This trading company is registered in St. Vincent and Grenadines. Fortunately, Quotex is also registered in BD and is known as a safe trading option.

Yes, as a Bangladeshi citizen, you can trade forex with Authorized Dealers and licensed foreign brokers. However, you must ensure these businesses are permitted and regulated by a reputable financial authority in that country.