Offshore Company for Bangladeshi Residents: Foreign Exchange, Tax and Money Laundering Rules in 2026

Offshore company for Bangladeshi residents: the 2026 legal position

An offshore company for Bangladeshi residents is legal to own, but almost never legal to fund on your own initiative. That is the point most founders, exporters and freelancers miss. Nothing in Bangladeshi law forbids a resident from being a shareholder of a company in Singapore, Dubai, Hong Kong, Delaware or the British Virgin Islands. What the law controls, tightly, is the money: buying foreign exchange, paying a non-resident, keeping export earnings abroad and acquiring foreign securities all require permission under the Foreign Exchange Regulation Act 1947, and Bangladesh Bank gives that permission only through a handful of defined routes.

This guide explains those routes as they stand in October 2026: the overseas equity investment rules for exporters, the USD 10,000 start-up window, share swaps, offices abroad and the position of non-resident Bangladeshis. It then covers what most online formation agents leave out: tax residence and disclosure to the National Board of Revenue, the money laundering exposure that attaches to unauthorised transfers, the 2026 rules that stop freelancers parking earnings in foreign accounts, and what to do if you already hold a foreign company that was set up the wrong way.

Summary: A Bangladeshi resident may lawfully own a foreign company only if the money that founds and funds it leaves Bangladesh through a permitted channel. In 2026 those channels are narrow: approval under the overseas equity investment rules for exporters, a general permission of up to USD 10,000 for start-ups, case-by-case share swaps, and offices abroad that are not subsidiaries. Foreign income must be reported and taxed in Bangladesh, and earnings kept abroad without permission breach the Foreign Exchange Regulation Act and can amount to money laundering.

Key point: Retaining export or service earnings abroad in any form, including through a foreign company, a foreign bank account or virtual assets, outside the notional and merchant accounts Bangladesh Bank permits, is a contravention of the Foreign Exchange Regulation Act 1947 under the 2026 consolidated circulars. Forming the company is rarely the offence; funding it and leaving money in it usually is.

At a glance

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Table of Contents

Can Bangladeshi residents own an offshore company?

Yes, but the answer turns on how the shares were paid for. The Foreign Exchange Regulation Act 1947 does not contain a provision that simply bans residents from holding shares or property abroad. Instead it regulates the transactions that make ownership possible: dealing in foreign exchange, payments to people outside Bangladesh, the receipt and repatriation of foreign earnings, and the transfer of securities.[1] Bangladesh Bank turns those prohibitions into permissions through rules and circulars. If the money that founded or capitalised the foreign company went out through one of those permissions, the holding is lawful. If it did not, the holding is the visible evidence of an unlawful transfer.

What an offshore company for Bangladeshi residents means

We use the term in its everyday sense: any company incorporated outside Bangladesh and owned, directly or indirectly, by a Bangladeshi resident. That covers a Singapore private limited company, a Hong Kong trading company, a UAE free zone entity, a US limited liability company opened online by a freelancer and a classic zero-tax vehicle in the British Virgin Islands or the Isle of Man. The analysis is the same for all of them, though a low-tax jurisdiction attracts closer scrutiny.

Resident for foreign exchange purposes

The foreign exchange test is different from the tax test. For the 1947 Act, an individual is resident in Bangladesh if he or she has resided here for six months or more in the preceding twelve months.[1] A Bangladeshi engineer who has lived and worked in Dubai for three years is not resident for these purposes and may hold a UAE company funded from foreign earnings. The same engineer who moves home becomes resident, and from that point every new payment into the company, and every dividend it pays, falls under the Act.

Why the rules are this strict

Bangladesh's capital account remains largely closed. Current transactions such as imports, travel and service fees are convertible within limits, but capital outflows are permitted case by case. The policy aim is to protect reserves and keep export earnings onshore. Outward investment has grown from a low base: official data showed net outward direct investment of USD 15.80 million in July to September 2025, against USD 1.70 million a year earlier, with Hong Kong, India and the UAE as the leading destinations.[8] Each of those investments was approved individually.

The Foreign Exchange Regulation Act 1947 and offshore structures

Five provisions of the Act do most of the work when a resident sets up or runs a foreign company. Read together, they explain why an offshore company for Bangladeshi residents is a regulated transaction rather than a private choice.

Buying foreign exchange and paying non-residents

Section 4 bars anyone other than an authorised dealer from buying or borrowing foreign exchange without permission, and requires foreign exchange acquired for a stated purpose to be used only for that purpose. Section 5 prohibits a person resident in Bangladesh from making any payment to or for the credit of a person resident outside Bangladesh unless the payment is permitted.[1] Subscribing for shares in a foreign company, paying its registered agent or lending it money are all payments to non-residents. Using foreign exchange released for travel or study to capitalise a company breaches the purpose rule in section 4 as well.

Foreign earnings must come home

Section 10 prohibits a person entitled to receive foreign exchange from doing anything that delays or forgoes its receipt without permission.[1] This is the provision that catches exporters who invoice through a foreign trading company and leave the margin abroad, and freelancers whose clients pay a foreign entity instead of the individual in Bangladesh. Bangladesh Bank's 2026 export circular states expressly that retaining export proceeds abroad in any form, including equity or portfolio investment, physical or virtual assets, or accounts in any currency including cryptocurrencies, contravenes section 5(1)(e)(i) of the Act and is subject to cognisance under section 23(1).[4]

Securities and the power to demand returns

Section 13 restricts taking or sending securities out of Bangladesh and transferring securities to non-residents without permission, which is relevant where a resident swaps shares in a Bangladeshi company for shares in a foreign holding company. Section 19 empowers the Government or Bangladesh Bank to require residents to make returns of their holdings of foreign exchange, foreign securities, and immovable property, undertakings or companies outside Bangladesh.[1] Offshore ownership is therefore something the State can demand to see, even where no routine filing exists.

Penalties for contravention

Under section 23, a person who contravenes, attempts to contravene or abets a contravention of the Act is punishable with imprisonment of up to seven years, a fine, or both.[1] Our guide to foreign exchange regulations in Bangladesh covers the tribunal procedure, confiscation and the burden of proof in more detail. For present purposes the point is simple: a foreign company funded without permission exposes its owner to criminal liability, and the passage of time does not cure the original transfer.

Lawful routes to an offshore company for Bangladeshi residents in 2026

There are four recognised routes for a resident to put money or value into a foreign company, plus the separate position of non-residents. Each has its own eligibility rules, approval body and reporting cycle. Choosing the wrong one is the most common reason applications stall at the bank.

Overseas equity investment by exporters

The Capital Account Transaction (Overseas Equity Investment) Rules 2022 allow exporters to invest abroad from balances in their Exporters' Retention Quota (ERQ) accounts. The 2026 export circular confirms that ERQ funds may be used for investment abroad only with prior approval under those rules.[4] Applications go through the authorised dealer bank to a scrutiny committee chaired by the Bangladesh Bank governor, and the investment is capped at the lower of 20 per cent of average annual export earnings over the previous five years and 25 per cent of net assets in the latest audited accounts.[6] [7]

Eligibility is demanding. As reported at issue, the applicant must hold an adequate ERQ balance, show five years of solvency in audited statements, hold a credit rating of at least grade two, not be a loan defaulter and produce tax, VAT and import-payment clearances. Destinations under UN, EU or US OFAC sanctions, or flagged by the FATF, are excluded.[7] All returns from the foreign company, including dividends, interest, sale or liquidation proceeds and fees, must be brought back within thirty days of receipt, and misuse of the investment is treated as money laundering.[6]

The USD 10,000 start-up window

FEID Circular No. 02 of 27 March 2025 grants general permission, under section 5(1)(e) of the Act, to remit up to USD 10,000 or equivalent to establish a legal entity abroad that supports a start-up business in Bangladesh.[2] The applicant files with an authorised dealer in the prescribed format, and the dealer reports to Bangladesh Bank within one month of incorporation, and in any event within six months of the remittance. Only one foreign entity may be established under the permission.[2]

The conditions matter. A resident enterprise must have operated in Bangladesh for less than ten years; funds must come from internal sources, not bank borrowing; the dealer must be satisfied of the business model's innovativeness, viability and scalability; and unused funds must be repatriated. Individual Bangladeshi nationals may also use the window if they have innovative ideas linked to bringing investment and earnings back to Bangladesh. Investors must file annual reports and the foreign entity's audited accounts within three months of its year end, and report any change in its ownership.[2] Our guide to start-up law in Bangladesh covers the domestic side of the structure.

Share swaps into a foreign holding company

The same circular states that Bangladesh Bank will consider requests from resident companies to acquire shares abroad by exchanging their own shares or securities rather than paying cash, where the swap ratio follows global best practice. Applications go through the authorised dealer to the Foreign Exchange Investment Department.[2] This is the route for founders who need a Singapore or Delaware top company for venture investors. It is approval-based, not automatic, and the valuation report will be scrutinised.

Offices abroad that are not subsidiaries

Residents other than banks and finance companies may open an office abroad without prior approval, reporting it to Bangladesh Bank within one month, and may remit up to USD 30,000 a year for its current expenses against the host country's approval and a lease. Any net surplus must be promptly repatriated. The 2026 circular is explicit that this authorisation cannot be used for equity remittances to establish subsidiaries abroad.[3] A liaison or sales office is therefore possible; a foreign company capitalised through the office allowance is not.

Non-resident Bangladeshis

A Bangladeshi who lives and earns abroad, and is not resident under the Act, may form and fund a foreign company from foreign earnings without Bangladesh Bank approval. Problems arise on return. Once resident, new capital from Bangladesh needs a permitted route, dividends must come home, and the holding must be disclosed for tax. Anyone planning to relocate should restructure or document the holding before the move, not after.

The table below compares the routes. On a phone, scroll it sideways.

Freelancers, exporters and the foreign LLC question

The fastest-growing group asking about an offshore company for Bangladeshi residents is the individual freelancer or software founder. The usual plan is a US limited liability company opened online, a US fintech account and a payment processor that does not onboard Bangladeshi residents. It is attractive commercially and, in most versions, unlawful.

What the 2026 circulars prohibit

FEPD-1 Circular No. 22 of 22 July 2026 consolidates the rules for freelancers and individual service exporters. It states that no foreign exchange earnings may be retained in notional accounts abroad, that all proceeds must be repatriated to Bangladesh within the time limits that apply to exports of goods, and that retention of export proceeds abroad in any form, including foreign accounts, assets or virtual assets, other than permitted notional or merchant accounts under approved arrangements, is a violation of the Foreign Exchange Regulation Act 1947.[5] A foreign LLC that invoices the client, holds the money and distributes only part of it to the owner in Bangladesh is the model the circular describes.

What is permitted instead

The same circular gives freelancers lawful tools. Banks may credit payments on electronic evidence such as platform statements and correspondence, receipts up to USD 20,000 need no Form-C, online payment gateways may be used for up to USD 10,000 per transaction, and banks may issue dual-currency Freelancer Cards. Service exporters may keep up to 50 per cent of net ICT earnings, or 30 per cent for other services, in an ERQ account and spend it on software registration, hosting, servers and travel.[5] The tax side is covered in our guide to freelancer tax in Bangladesh, and the account mechanics in our guide to outward remittance in Bangladesh.

Paying formation fees by card

Formation agents often suggest paying the incorporation fee by international card. Card entitlements are released for defined purposes, and the 2026 circular requires banks to guard against illegitimate online payments abroad, naming forex and stock trading, crypto purchases and gambling.[3] Paying a registered agent to incorporate a company is the first step of a capital transaction, not a travel or IT expense. The start-up window exists precisely so that this payment can be made lawfully, and it should be used.

Exporters and offshore trading companies

Exporters face a different version of the same problem. Routing sales through an affiliated trading company in Hong Kong or Dubai, which buys from the Bangladeshi factory at a low price and sells to the real buyer at the market price, leaves the margin abroad. That breaches the repatriation rules and, as explained below, can be money laundering through under-invoicing. A foreign sales company is lawful only if it is funded through an approved route, trades at arm's length and repatriates its returns. Our guide to export law in Bangladesh sets out the four-month repatriation rule.

Tax residence, foreign income and disclosure to the NBR

Foreign exchange approval and tax compliance are separate obligations. A lawful offshore company for Bangladeshi residents still produces reportable income, and an unlawful one does not escape tax.

The tax residence test

An individual is resident for an income year if he or she stays in Bangladesh for 183 days or more in that year, or for 90 days or more in that year and 365 days or more in the four preceding years.[9] The two tests can produce different answers: a person may be non-resident under the six-month foreign exchange test yet resident for tax because of the four-year look-back, or the reverse.

Foreign income is taxable

A resident is taxed on income that accrues, arises or is received in Bangladesh and also on income from outside Bangladesh that accrues, arises or is received by or on behalf of the person in the year.[10] Dividends, salaries, director's fees and interest from a foreign company are therefore reportable. Where the foreign country has taxed the same income, residents may claim a credit for the foreign tax, following the relevant treaty; Bangladesh has 37 double tax treaties.[11] Our international tax practice advises on treaty relief and the characterisation of offshore income.

Showing foreign assets in the wealth statement

Since 2022 the statement of assets and liabilities (form IT-10B) has included a column for assets held in foreign countries, and as reported in 2024 the statement was required from taxpayers whose wealth at home and abroad exceeded Tk 50 lakh. The same reporting found that no taxpayer had used the column to declare a foreign home or vehicle, and officials cited fear of action by the Anti-Corruption Commission or Bangladesh Bank as one reason.[12] That fear points to the real difficulty.

Disclosure does not cure a foreign exchange breach

Declaring shares in an offshore company to the NBR satisfies the tax law, but it does not supply the missing Bangladesh Bank permission. If the company was funded through an unauthorised transfer, the tax declaration may be the first document that records it. Holders in that position need a joined-up strategy: tax, foreign exchange and money laundering advice before anything is filed, not after.

Where profits are left inside the company

Leaving profits inside a foreign company does not make them invisible. If the company is managed from Dhaka, has no staff or premises abroad and exists only to receive the owner's fees, the NBR can examine whether the income is in substance the owner's. The same facts will interest Bangladesh Bank, because profits kept abroad are earnings not repatriated.

Money laundering risk and the asset recovery drive

The most serious exposure for an offshore company for Bangladeshi residents is not tax but money laundering. The Money Laundering Prevention Act 2012 defines money laundering to include smuggling money or property earned through legal or illegal means to a foreign country.[13] Lawfully earned money sent abroad without permission is therefore within the definition.

Penalties

An individual convicted of money laundering faces four to twelve years' imprisonment and a fine of twice the value of the property involved or Tk 10 lakh, whichever is higher, and the court may forfeit the convicted person's property to the State. An entity faces a fine of twice the value or Tk 20 lakh, whichever is higher, and cancellation of its registration.[13] Our guide to anti-money laundering law in Bangladesh explains the investigation and freezing powers.

Offshore vehicles in recent investigations

Since August 2024 Bangladesh has sought to trace assets moved abroad, and offshore vehicles have featured prominently. In May 2025 the UK's National Crime Agency froze two London properties as part of a civil investigation linked to people associated with the former government; filings reviewed by the Financial Times showed both were held through entities registered in the Isle of Man.[14] The lesson for ordinary business owners is that offshore holding structures are now examined from both ends, by investigators in Bangladesh and by enforcement agencies abroad.

Beneficial ownership and banking scrutiny

Every reputable registry and bank now asks who ultimately owns and controls a company. Bangladeshi banks must apply KYC and AML/CFT standards to outward remittances, including source-of-funds checks under the start-up window.[2] [3] Foreign banks will ask how the company was capitalised. A resident who cannot show a Bangladesh Bank approval or a qualifying general permission will struggle to open or keep an account, quite apart from any enforcement risk.

Choosing a jurisdiction and a structure

Once a lawful route is available, the choice of jurisdiction is a commercial question. Hong Kong, Singapore and the UAE are the most common destinations for Bangladeshi trading and services groups, and Hong Kong was the leading destination for net outward investment in July to September 2025.[8] Delaware or Singapore is usually preferred where venture investors are involved. We cover the Singapore process separately in our Singapore company formation guide.

Factors that decide the jurisdiction

• Treaty position: whether a double tax treaty with Bangladesh exists and how it treats dividends and fees.
• Substance: many low-tax jurisdictions now require core income-generating activity, local directors or premises; a shell managed from Dhaka may fail those tests.
• Banking: whether a local bank will open an account for a company with Bangladeshi owners.
• Reputation: sanctioned or FATF-flagged jurisdictions are excluded from the exporters' route, and zero-tax havens draw more questions from every regulator.[7]
• Exit: how easily profits and sale proceeds can be paid out and brought home within the repatriation deadlines.

The regulators involved

Several authorities touch an offshore structure, and each has a distinct role.

Step by step: a compliant offshore company for Bangladeshi residents

This is the sequence we follow. Each step produces a record that will satisfy the authorised dealer, Bangladesh Bank, the NBR and a foreign bank.

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Critical mistakes to avoid

• Forming first, asking later: incorporation is easy online; funding it lawfully is the hard part. Settle the route before paying anyone.
• Using the office allowance for a subsidiary: the USD 30,000 office facility expressly excludes equity for subsidiaries.[3]
• Leaving client receipts abroad: freelance and export earnings held in a foreign company or account breach the 2026 circulars.[5]
• Under-invoicing through a related trader: margin left offshore is unrepatriated export proceeds and an AML risk.
• Missing reporting deadlines: the start-up window requires reports on incorporation, annual reports and audited accounts.[2]
• Ignoring the tax return: foreign dividends and assets belong in the return and wealth statement.
• Using nominees to hide ownership: nominee shareholders do not change who the beneficial owner is, and concealment aggravates any breach.

If you already hold an offshore company

Many residents own foreign companies formed years ago, during a stint abroad or on a formation agent's advice. The right response depends on how the company was funded.

Map the history first

Reconstruct where the share capital and every later injection came from, what the company earned, where its bank accounts are and what has been paid out. Funds earned while non-resident, capital remitted under an approval and capital remitted without one lead to very different conclusions. Do this under legal privilege, before speaking to a bank or filing anything.

Stop the flow

Stop routing new earnings into the company until the position is resolved. Each diverted receipt is a fresh contravention.

Choose between regularising, repatriating and closing

Options include seeking approval to continue a structure that serves a genuine business purpose, repatriating retained funds through the banking channel, and winding the company up with the proceeds brought home. Each must be sequenced with the tax return and wealth statement. The aim is a defensible footing for the offshore company for Bangladeshi residents in that position, not reliance on silence. Our tax structuring practice works with our banking and foreign exchange team on these files.

What to watch in 2026 and 2027

Bangladesh Bank's consolidated foreign exchange circulars are valid for one year from issue and are read with any circular issued in the meantime.[3] The outward remittance circular of 30 September 2026 and the freelancer and export circulars of July 2026 will be reissued in 2027, and the limits in this guide may change with them. Watch whether the start-up window is widened, whether the overseas equity rules open to non-exporters, and how the asset recovery drive treats offshore holdings that come to light.

An offshore company for Bangladeshi residents can be a sound commercial tool when it is funded through a permitted route, reported for tax and used for real business abroad. If you are planning one or already hold one, speak to TRW before the next payment moves.

Frequently asked questions

Is it legal for a Bangladeshi resident to own an offshore company?

Owning shares is not itself prohibited, but funding the company requires permission under the Foreign Exchange Regulation Act 1947. The holding is lawful only if the money left Bangladesh through an approved or generally permitted route, and foreign income and assets are reported for tax.[1]

Can I open a US LLC from Bangladesh as a freelancer?

Not on the usual model. The July 2026 freelancer circular prohibits retaining service earnings abroad in foreign accounts or assets outside approved notional or merchant accounts. The lawful route for setting up a foreign entity is the USD 10,000 start-up permission, which carries its own conditions and reporting.[2] [5]

How much can a start-up send abroad to set up a company?

Up to USD 10,000 or equivalent, to establish one legal entity abroad, under FEID Circular No. 02 of 27 March 2025. Resident enterprises must have operated for less than ten years and use internal funds.[2]

Can a Bangladeshi exporter invest in a foreign subsidiary?

Yes, from ERQ balances with prior approval under the Capital Account Transaction (Overseas Equity Investment) Rules 2022, within a cap based on export earnings and net assets, and with returns repatriated within thirty days of receipt.[4] [6]

Can I open an office abroad without Bangladesh Bank approval?

Yes. Residents other than banks and finance companies may open an office abroad and report it within one month, with up to USD 30,000 a year for its expenses. The facility cannot be used to capitalise a subsidiary.[3]

Do I pay tax in Bangladesh on dividends from my foreign company?

If you are tax resident, yes. Residents are taxed on foreign income that accrues, arises or is received in the year, with credit for foreign tax under the relevant treaty.[10] [11]

Must I show my offshore company in my wealth statement?

Yes. The statement of assets and liabilities has included a column for assets held abroad since 2022. Declaring the holding meets the tax obligation but does not cure any foreign exchange breach in how it was funded.[12]

Is sending legally earned money abroad money laundering?

It can be. The Money Laundering Prevention Act 2012 includes smuggling money or property earned through legal or illegal means to a foreign country, with four to twelve years' imprisonment for individuals.[13]

Does living abroad change the position?

Yes. An individual who has not resided in Bangladesh for six months in the past twelve is not resident under the 1947 Act and may fund a foreign company from foreign earnings. The rules apply again once the person returns and becomes resident.[1]

What should I do if my offshore company was set up without approval?

Stop routing new money into it, reconstruct its funding history under legal privilege, and take joint foreign exchange, tax and AML advice before filing or approaching a bank. The options are regularisation, repatriation or closure.