Regulators that shape healthcare compliance
Healthcare compliance in Bangladesh starts with sector licensing. The Directorate General of Drug Administration (DGDA) regulates medicines, including product registration, manufacturing licences, import approvals for raw materials and the pricing of certain essential drugs. The Directorate General of Health Services licenses private hospitals, clinics and diagnostic centres and oversees renewals. Environmental clearance and the handling of medical and pharmaceutical waste bring in further requirements. Lapsed licences or clearances can halt operations, so renewal dates deserve the same attention as tax deadlines. Pharmaceutical manufacturers also need to keep good manufacturing practice documentation ready for DGDA inspection, and exporters must meet the requirements of each importing country's regulator.
Tax and VAT points specific to healthcare
The VAT treatment of healthcare services, medicines and medical equipment includes exemptions and product-specific rules that can change through the annual Finance Act or NBR orders. Applying an exemption too broadly, or missing a change in the treatment of a product or service, is a common source of VAT assessments. Hospitals that operate pharmacies, canteens or other ancillary services should assess the VAT position of each activity separately.
On income tax, hospitals and diagnostic centres need to withhold tax correctly on fees paid to consultant doctors and other professionals under the Income Tax Act 2023. Pharmaceutical companies should review the treatment of promotional spending, and those with foreign parents need transfer pricing documentation for related-party transactions.
Employment and fund obligations
Hospitals and pharmaceutical manufacturers employ large workforces across shifts and sites. That brings obligations under the Bangladesh Labour Act 2006, including the Workers' Profit Participation Fund for qualifying companies, along with the administration of provident and gratuity funds. Funds also need to meet NBR conditions for recognition or approval to keep their tax benefits. Calculation errors and late contributions are frequent findings in inspections and audits. Where staff are engaged through contractors or agencies, responsibility for statutory benefits and correct withholding should be set out clearly in the contract.
Reporting and governance
Healthcare companies registered under the Companies Act 1994 need to keep their RJSC filings current, and listed pharmaceutical companies have additional disclosure duties under BSEC rules. Financial statements under IFRS involve sector judgements on revenue with product returns, valuation of inventory close to expiry, and capitalisation of medical equipment. Hospitals run by trusts or foundations should confirm which reporting framework their constitution and regulators require.
RRH's VAT and Customs Services team reviews VAT positions on healthcare products and services. Our Payroll & Fund Management team manages payroll, withholding and fund administration, and our Corporate Tax Services team handles returns and appeals.
Related RRH services: VAT and Customs Services, Payroll & Fund Management and Corporate Tax Services.