Advisory service for intergroup transactions

1. Types of Transfer
Pricing Advisory
&
Memorandum in
relation with
intragroup services
21 December 2022

2. Discussion Topics
Types of Advisory Services
Intragroup Services

3. Types of TP Advisory
Services
TP
Memorandum
Permanent
establishing
advice
Agreement
review &
Setting pricing
strategy
Business
remodeling/r
estructuring
advice
Attestation
on
Remittance
from BIDA
Letter of
attestation
Planning
Memorandum
1
TP
Services
TP
Documentation
2 4
3

4. Permanent establishment: Sec 2 (44)
Client asks for whether from the context of transfer pricing they have
any PE in Bangladesh
We advice in context of
 In reference to
Bangladesh Income Tax
Ordinance
 In context of DTTA
How we focus the advice
 Covering the subject
matter and background
in the advice
 Our Suggestion to PE
 Company’s approach
1

5. Agreement review and
Price setting
Focus on agreement review and
advice on whether the content are
contradictory to Transfer pricing
implication.
We propose a price for the said
transaction through performance of
benchmarking analysis
Agreement Review
Price setting
2

6. Focus points in Agreement review
Functions:
Focus areas in scope
of agreement or any
annexures
Assets:
Focus areas in assets
or infringement clause
Risks:
Focus areas in
termination,
infringement, penalty
and indemnification

7. Business remodeling/ restructuring
advice
3
Types of TP Advisory
Services
Types of TP
Advisory Services
Types of TP
Advisory Services
Types of TP
Advisory Services

8. Attestation on
Remittance from BIDA
According to paragraph 6 of BIDA
circular no. 59 published in 2021
If the proposed remittance is being
paid/remitted to a sister concern or parent or
subsidiary of the applicant company, a third-
party assessment should be submitted
Explaining whether the Arm's Length Principle
has been followed in the said transaction in
accordance with the rules stipulated in the
Income Tax Ordinance 1984
4

9.  Payment of Royalty
 Technical
Knowledge/know-fees
 Technical Assistance Fees
 Franchise Fees
 Operation & Maintenance
services
 Payable to foreign
Engineering procurement
& Construction firms
Permission giving authority for
remittance repatriation
BIDA Bangladesh Bank
Purchase & sales of goods
Purchase & sales of assets
Management and
administrative
services
Others Beyond the scope
of BIDA
Paragraph-2, BIDA circular
59/2021 A
Paragraph-7, BIDA circular
59/2021
A

10. Types of
permission
given by BIDA
Remittance
Repatriation
Contract/Agreement
Endorsement
In case of Remittance Repatriation,
clients may need the third party
assurance to remit fees in terms of
authorised dealer banks requirement in
yearly basis.
In case of Contract Endorsement client collect the assurance
from the third party regarding the arms length condition of
the transections & submit it to the BIDA for a permission of
several years to remit fees.

11. Permissible amount of fees to be remitted
without BIDA approval (Schedule 1)
For projects under
implementation, not
exceeding 6% of the total
accumulated C&F value of
imported machineries of
the concurrent year(s)
before going into
commercial operation.
For projects under
commercial operation, not
exceeding 6% of the
previous years' sales
(excluding Value Added
Tax) as declared in the
income tax returns.
Royalty, technical know
how & technical
assistance fees
Fee(s) more than
US$ 0.1 million
USD will be
allowed to be
remitted in
installments. The
50% of the
approved claim will
be allowed to remit
in the 1st year,
30% in the 2nd
year, and the rest
of the 20% in the
3rd year.
Franchise Fees
All advance
payments, if
allowed before
generating revenue
must be adjusted
within one year of
going into
commercial
operation by the
entity.
Advance fees
In case of
recurring
payments
maximum 6% of
sales revenue
declared in
previous year’s
income tax
return
Fees Payable to
contractors in a
project

12. General Conditions (Paragraph-3,
BIDA circular 59/2021)
Private industrial enterprises as registered
by BIDA and defined in Section 15(3) of the
Bangladesh Investment Development
Authority Act, 2016
All proposals for outward remittance
will be considered based on the value
addition of the transaction.
Fee(s) will be allowed to remit by the
local companies to their foreign
collaborator usually on a yearly basis

13. Procedures of Remitting Fee(s) (Paragraph-
4, BIDA circular 59/2021)
Payment of royalty, technical
knowledge/technical
knowhow, technical
assistance and franchise
Fee(s)
Apply to BIDA in prescribed format
Endorsement by designated official of BIDA
One contract permits several future transections
BIDA provides list required of documents
AD banks ensure compliances
After completion, AD banks send it to the BIDA
for verification.
Payment of Fee(s) in
Advance
Technical knowledge/ technical knowhow or
technical assistance fee(s) up to US$ 10,000 per
agreement will be allowed to remit once a year.
Advance payment beyond the limit will be
allowed only on the terms and conditions
mentioned in the contract
Advance payment must be adjusted with the 6%
of the C&F value of all imported machineries or
with the 6% of the revenue within two years of
starting commercial operation.
Advance payment must be accompanied with
bank guarantee, affidavit or any other
appropriate guarantee.
Payment of Fees to
Contractors in a project
Contractors from foreign countries and
operating in Bangladesh will be allowed to remit
fees, only with prior approval from BIDA on
each and every case of repatriation
Local company making an agreement with an
international service provider for delivering any
service produced locally or imported from
overseas, the local company can apply for
permission to remit fees earned from that
service.

14. Examples of intra-group services
Cost
Sharing
Royalty,
Technical
know-
how fee
Marketing
services
Promotional
services
Client
management
services
IT
services
Financial
services
e.g. loan ,
lease

15. Thank You