Bangladesh Bank Circular 20: Remitting Royalty and Technical Fees Beyond the 6 Percent Cap in Economic Zones

As covered in ZZKR & Co.’s weekly economic roundup of the week ending 3 November 2026, Bangladesh Bank has refined how foreign fees can leave the country for Economic Zone enterprises. FEPD-1 Circular No. 20, dated 13 July 2026, rewrites paragraph 49 of FE Circular No. 37 (30 September 2025): the rigid cap on royalty, technical know-how and technical assistance remittances is now an approval gate. For SME owners running technology-licensing, training or brand agreements across borders, this changes what your finance system must prove, and when.

What Circular 20 actually changed

The circular gives Authorized Dealers (ADs) two new remittance paths for enterprises operating in the Domestic Processing Areas (DPAs) of Economic Zones:

• Royalty, technical know-how and technical assistance fees beyond the previously prescribed limits can now be remitted, subject to prior approval from the Bangladesh Economic Zones Authority (BEZA).
• “Other similar legitimate expenses” now also require BEZA approval irrespective of amount. Small value no longer means automatic passage.

Everything else in paragraph 49 stands unchanged. Banks must still prefer the enterprise’s own foreign-currency balances, verify that the business holds no foreign-currency income it should have used, and confirm that applicable taxes were deducted and paid before any remittance. Circular 20 does not loosen the paperwork. It loosens the ceiling.

The 6 percent rule it amends

Under paragraph 49 of FE Circular No. 37, DPA enterprises could remit these fees from their Taka accounts only within fixed bounds:

• New projects: not more than 6 percent of the cost of imported machinery.
• Ongoing businesses: not more than 6 percent of the previous year’s sales as declared in the income tax returns.
• Anything above the limit already required prior BEZA approval under 49(3).

In practice the caps functioned as stop signs. A company paying 8 percent of declared sales in royalty for a foreign brand licence, or absorbing a technical-assistance package that exceeded its machinery-cost baseline, had nowhere to go. Deals waited or renegotiated. Circular 20 converts those stop signs into checkpoints: pay more if BEZA approves, and route any similar legitimate expense through BEZA whatever its size.

Five implications for SME owners and finance teams

1. Plan approvals into your deal calendar. Fees above the 6 percent baseline are payable, but only after BEZA signs. Build approval lead time into licensing renewals, technical-assistance contracts and training packages. An unsigned approval is a frozen payment.
2. Your income tax return is now a working document. For ongoing concerns, the 6 percent baseline reads directly out of declared sales. Under-declared revenue quietly shrinks the fees you can remit inside the limit. Compliance is no longer just a tax matter; it sets your remittance capacity.
3. TDS proof precedes remittance. Banks must confirm deduction and payment of applicable taxes before releasing funds. A remittance without challans and deduction records bounces at the AD, not at Bangladesh Bank.
4. One trail from contract to bank. BEZA reviews the fee agreement, the declared-sales baseline and the tax-paid position; your bank executes against the approval. If those live in separate spreadsheets, every application becomes a reconstruction project.
5. The “similar expenses” clause is the sleeper. Because similar legitimate expenses need BEZA approval irrespective of amount, even modest recurring software-support or consultancy payments now belong in an approval register. Quiet, habitual payments are the exposure.

What your books must show by default

The application file BEZA and your bank will examine has three moving parts, and all three live in your ledger: the fee contract and its accruals, tax deducted at source on each payment, and the remittance itself. Odoo keeps the sequence on one axis: the vendor contract creates the payable, TDS is computed and recorded at payment, and the outward remittance is posted against the approval reference, with every document attached to the transaction. When BEZA asks what you declared last year, the answer a report prints is the same number your auditor signed and your bank can trace. The timing is not random. Bangladesh Bank is consolidating its foreign-exchange rulebook, with the master circular on cross-border loans, guarantees and external borrowing (FEPD-1 Circular No. 32, 2 September 2026) refreshes and zone-specific facilitation landing one after another. And the wider account is under pressure: as we covered in our analysis of Bangladesh’s external debt and LDC graduation, external payment capacity will stay tight through 2027, so every outward remittance channel now carries a compliance story with it. A business that can show a clean fee trail moves faster than one that has to explain itself.

Frequently Asked Questions

Sources

• Bangladesh Bank, FEPD-1 Circular No. 20, dated 13 July 2026 — Remittance on account of royalty, technical know-how, technical assistance fees and other similar expenses for DPAs of EZs (bb.org.bd).
• Bangladesh Bank, FE Circular No. 37, dated 30 September 2025 — Consolidated foreign-exchange regulations, paragraph 49.
• Zoha Zaman Kabir Rashid & Co., Chartered Accountants — weekly economic and policy update (facebook.com/zzkrca), week ending 3 November 2026.
• Bangladesh Bank, FEPD-1 Circular No. 32, dated 2 September 2026 — master circular on loans, overdrafts, guarantees and external borrowings.

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Last updated: November 3, 2026