Foreign commercial banks (FCBs) operating in Bangladesh are allowed to remit the shares of expenses at their head offices without the central bank's prior approval.
"The FCBs will be able to remit such expenses complying with the Income Tax Ordinance 1984 and other conditions," a senior official of Bangladesh Bank (BB).
To this end, the BB issued a circular on Sunday and asked all authorised dealer banks to follow the latest instructions.
The central bank relaxed its policy in line with the FCBs' appeal, the BB official told the FE.
"We've relaxed our policy to facilitate smooth operations of branches of foreign banking companies in Bangladesh," he noted.
According to the circular, branch operations of foreign banks need to share expenses of their head offices against benefits accrued to operations in Bangladesh.
It also said that these expenses of head offices are incurred on account of the general management, administration and strategy of the whole company, including its foreign branches.
"Head offices allocate these expenses to their branches in accordance with standard practices," it noted.
It further said that the gross remittable amount (before deduction of tax at source) will not exceed the limit allowed in the country's income tax regulations.
"The remittance is subject to compliance with tax regulations like deduction and payment of applicable source tax and VAT," the circular added.
Nine FCBs are currently in operation here.
A foreign bank senior official welcomed the BB's latest move.
He said it would help boost foreign investments in Bangladesh.