Bangladesh

There is no concept of group taxation in Bangladesh.

Transfer pricing

Transfer pricing on international transactions

The Bangladesh Finance Act, 2014 built upon the separate code on Transfer Pricing Regulations, which are largely based on Organisation for Economic Co-operation and Development (OECD) guidelines, and describe the various transfer pricing methods, impose transfer pricing documentation requirements, and contain penal provisions for non-compliance.

The Bangladesh Transfer Pricing Regulations prescribe that income arising from ‘international transactions’ between AEs should be computed having regard to the ‘arm’s-length price’, including an allowance for any expense or interest arising from an international transaction. It also includes an allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service, or facility provided or to be provided to any one or more of such enterprises.

Transfer pricing filing requirements and compliance

Statement of international transactions

Every taxpayer who has entered into an international transaction is required to furnish a statement of international transactions along with the return of income.

Documentation

Taxpayers whose aggregate value of international transactions exceeds BDT 30 million are required to maintain information and documentation, as part of their transfer pricing documentation, to demonstrate that the pricing policy complies with the arm’s-length principle.

Accountant’s report

Every taxpayer who has entered into international transaction(s) whose aggregate value exceeds BDT 30 million is required to obtain an independent accountant’s report in respect of all international transactions between AEs.

Rules prescribing the use of ‘range’ and multiple-year data

The ‘range concept’ shall be applicable when (i) the most appropriate method is either the comparable uncontrollable price method, the resale price method, the cost plus method, or the transactional net margin method, and (ii) there are at least six comparables. Where these conditions are not fulfilled, the ‘arithmetic mean’ shall apply.

For the determination of the arm’s-length range, the transaction point would be the data points lying between the 30th and 70th percentile of the data set.

Thin capitalisation

Bangladesh does not have a specific thin capitalisation regime; however, while prescribing regulatory requirements for foreign loans, the Bangladesh Investment Development Authority has recommended that the debt-to-equity ratio in a Bangladeshi company must not exceed 70:30.

Controlled foreign companies (CFCs)

There are no taxation rules for CFCs in Bangladesh.