The rules apply where a taxpayer enters into an international transaction with an associated enterprise, meaning a related party outside Bangladesh connected through ownership, control or certain other relationships defined in the law. Subsidiaries and branches of multinational groups are the obvious examples, but Bangladeshi groups with foreign subsidiaries or affiliates are also covered. The scope of associated enterprise is broader than simple majority ownership, so groups should check the definition carefully. We review the group's relationships and transactions to confirm which are within the rules and what documentation and filings are required each year.

The Income Tax Act 2023 requires taxpayers with international transactions to keep prescribed information and documents describing the group, the business, the transactions, the functions performed, assets used and risks assumed, the pricing method chosen and the comparable data relied on. A statement of international transactions must be filed with the return, and some taxpayers must also obtain an accountant's report. Thresholds and formats can change through the Finance Act and rules, so the current requirements should be checked every year. We help clients build documentation that is accurate, consistent and practical to maintain.

Yes, they are among the most frequently challenged payments. The tax authorities often ask whether services were actually rendered, whether they duplicated work done locally, whether the Bangladeshi company benefited and whether the fee is commercially justified. Royalties are tested against the value of the brand or technology to the local market. Evidence such as service logs, reports, correspondence and cost allocations is essential. Remittance of these fees also requires compliance with Bangladesh Bank rules. We help companies document the benefit received and align the agreements, pricing and remittance paperwork before payments are made.

Both regimes examine related-party prices, but from opposite directions. The income tax authorities may suspect that import prices from a parent are too high, reducing local profit, while customs may suspect they are too low, reducing duty. A year-end adjustment that lowers prices for income tax may be treated by customs as evidence of earlier overvaluation, or the reverse. Under the Customs Act 2023, related-party transactions may be examined to see whether the relationship influenced the price. We advise on a coherent approach so that the same pricing story can be explained consistently to both authorities.

The Income Tax Act 2023 provides for penalties for failing to keep documentation, failing to file the statement of international transactions, failing to furnish information when required, and for adjustments resulting from non-arm's length pricing, in addition to the tax and any interest on the adjusted amount. Exact amounts and conditions should be checked in the current law and the latest Finance Act. Penalties can often be reduced or avoided by timely compliance and cooperation. We review the client's exposure, advise on corrective filings and respond to penalty proceedings when they are initiated.

Yes. Interest on loans from a foreign parent or affiliate must be at an arm's length rate, considering the borrower's credit standing, the currency, the tenor and the security. Guarantee fees charged by a parent for supporting local borrowing are also tested. Foreign loans require regulatory scrutiny and reporting, and the Finance Act 2026 reduced withholding on interest paid to non-residents from 20% to 10%, which affects the after-tax cost. We review the loan terms, pricing evidence and approvals together, so that interest is deductible, the loan is properly approved and repayments can be remitted when due.

There is no fixed duration. A focused audit that is answered promptly with good documentation may conclude within a single assessment cycle, while disputes over benchmarking or the characterisation of a business can run through several levels of appeal over a number of years. The time limits for assessment and appeal under the Income Tax Act 2023 shape the timetable. We give clients a realistic view of likely stages after reviewing the notice and the documentation, and we manage the response to avoid procedural delays that weaken the company's position. Early engagement often shortens the process.

Where Bangladesh has a double tax treaty with the country of the associated enterprise, the treaty may provide a mutual agreement procedure through which the competent authorities of the two countries try to eliminate double taxation caused by an adjustment. Access depends on the treaty wording, time limits and the domestic procedures in each country, and the outcome is not guaranteed. The procedure can run in parallel with or after domestic remedies, depending on the case. We advise on whether to invoke it and coordinate with advisers in the other country on the request and supporting evidence.