Transfer pricing in Bangladesh applies when related parties deal across borders. The tax authority expects the prices to match what independent parties would have agreed. This article summarises who is covered, which filings and records are expected, what the law says about tax officer challenges and what multinational groups can do now. It reflects the Income Tax Act 2023 as we read it at the time of writing, and later amendments may have changed the detail.

Legal basis and who is covered

The Income Tax Act 2023 deals with transfer pricing in a chapter covering sections 233 to 239, with penalty provisions in sections 276 to 279. The central concept is the international transaction: a transaction between associated enterprises, where either or both are non-resident. It covers the purchase, sale or lease of tangible or intangible property, the provision of services, lending and borrowing, and any other transaction bearing on profit, income, loss, assets or financial position.

Enterprises are associated under a range of tests. These include one enterprise holding shares that carry more than 25 per cent of the voting power in the other, one appointing more than half of the other's board, or one having the practical ability to control the other's decisions. Financial links also count: borrowings from one enterprise that exceed 50 per cent of the book value of the other's total assets, or guarantees that exceed 10 per cent of the book value of the other's total borrowings. A transaction with a third party can be caught where an associated enterprise controls it.

Methods and the arm's length range

The arm's length price must be determined with the most appropriate of the following methods: comparable uncontrolled price, resale price, cost plus, profit split, transactional net margin, or another method where none of the first five can reasonably be applied. The choice depends on the nature of the transaction, the reliability of the information, and the functions performed, assets employed and risks assumed.

Where the method is not profit split or the residual method and the dataset has six or more entries, the Act constructs an arm's length range from the 30th to the 70th percentile. It accepts a price inside the range and replaces any price outside it with the median. With fewer than six entries the arm's length price is the arithmetic mean.

Documentation and filings

• Record keeping: anyone with an international transaction must keep the information, documents and records prescribed by the rules (section 237). The Board may prescribe how long they are kept.
• Statement of international transactions: filed with the income tax return in the prescribed form and manner (section 238).
• Accountant's report: where the aggregate value of international transactions recorded in the books exceeds Taka 3 crore (BDT 30 million) in an income year, the Deputy Commissioner of Taxes may by notice require a report from a chartered accountant or a cost and management accountant (section 239).

The statement is filed with the return. The accountant's report is called for by notice, although some secondary guides describe it as automatic above the threshold. Readers should check the notice and the current rules instead of assuming.

The Act leaves the content of the file to the rules. A 2015 ICAB conference presentation summarised the rules under the earlier Income Tax Ordinance 1984. They listed ownership and business profiles, profiles of group members, group and entity financial statements, details of associated enterprise transactions, and the contracts. The Ordinance has since been replaced, so the current rule text should be confirmed. PwC notes that the Bangladeshi regulations are largely based on OECD guidelines. A file would therefore normally also contain a functional analysis, the reasoning for the chosen method and a benchmarking study.

What draws questions and how disputes proceed

The Act sets out when a tax officer can recompute the price: where the price was not determined using the prescribed methods, where the taxpayer did not keep documents as required, or where the data used to compute the price is unreliable or incorrect (section 235). The officer must first serve a show-cause notice. With prior Board approval, the Deputy Commissioner of Taxes may also refer the matter to a Transfer Pricing Officer (section 236), who serves notice and issues a written order. Separately, section 240 lets the Deputy Commissioner determine income where a resident's business with a closely connected non-resident produces no profit or less than the ordinary profit.

Penalties are capped by reference to transaction value. Failure to comply with a notice under section 235 or to keep records under section 237 can attract a penalty of up to 1 per cent of the value of each international transaction. Failure to file the statement under section 238 can attract up to 2 per cent, and failure to furnish the accountant's report up to Taka 3 lakh. No penalty may be imposed without a hearing (section 280).

Two recent changes affect disputes and financing. The Finance Act 2026, as summarised by PwC, reduces the pre-deposit on the difference between assessed and admitted tax to 1 per cent before the Commissioner of Taxes (Appeals), 3 per cent before the Tax Appellate Tribunal and 10 per cent before the High Court Division. It also removes the approval mechanism for interest on loans from associated entities above BDT 1.5 million, so documenting that the interest rate is arm's length carries more weight.

Beyond the statute, intercompany services, management charges, royalties, loans and cost allocations are the transactions that usually prompt questions in any jurisdiction. Expect to be asked whether the service was delivered, what benefit the Bangladesh entity received and how the charge was calculated.

Practical steps for transfer pricing in Bangladesh

• List every cross-border related-party transaction and total them by income year to see where the BDT 30 million level sits. Apply the Act's wider association tests, which go beyond shareholding.
• Check that intercompany agreements exist, were signed before the service started, and describe the service, pricing method and invoicing.
• Keep evidence of delivery, such as reports, correspondence, deliverables and time records.
• The statement and the records are due without any notice, so prepare the file before one arrives.
• Reconcile the statement of international transactions to the audited accounts and to remittance records.
• Review pricing methods and ranges each year, including the comparables.
• Decide who in the group owns the file and how Bangladesh will be told of any change in group pricing.

RRH's Transfer Pricing Services cover documentation, benchmarking studies and representation before Transfer Pricing Officers. Related work on returns and withholding sits within Corporate Tax Services; structuring questions fall under Tax Advisory.

This article gives general information and should not be read as legal, regulatory or tax advice. Rules and timelines change, so readers should confirm current requirements with an adviser before acting.