A trade license is one of the most important documents when it comes to conducting business in Bangladesh. It essentially validates a person or an organization as a business entity under Bangladeshi law and enables them to engage in any form of transaction. Needless to say, acquiring a trade license for legal business conduction is a must. But how to obtain a trade license in Bangladesh and what are its categories? Let's find out.
Types of Trade License
Trade license was enacted as a singular authoritative document to conduct any form of business transaction. With time, the process came to include different non-profit, foundations, NGOs, and other similar organizations in its wings. The process and requirements of trade license have been outlined in The Companies Act of 1994. It has been further detailed in the Municipal Taxation Ordinance of 1986 and The City Corporation Ordinance of 1983.
Depending on the business, types, channels, and serving sector, trade licenses can be categorized into 1200 different types. All of these are active under the current legislative regulation.
However, for ease of understanding, trade license can be broadly categorized into 3 types –
The General Trade License
The general trade license applies to all types of small and medium scale businesses. The government has outlined a set revenue and transaction limit to be eligible for the general trade license. Basically, every other form other than the latter two here will fall under general trade license.
Commercial Trade License
A commercial trade license is required for any kind of registered business entity in Bangladesh. The business can be set up under a personal name or as a separate entity. This applies to retail stores, super shops, and different kinds of suppliers.
The Manufacturing Trade License
Almost all the large conglomerates of Bangladesh hold this license. As the name suggests, any business that engages in the production and distribution of goods falls under this category. Any business with a production facility or factories and industries is eligible for the manufacturing trade license.
Process of Obtaining a Trade License
There are a few fundamental differences between each of the trade license classes. As a result, there are differences in their application process, authority, and required documents. The application process for each trade license is outlined below.
Application Process for General Trade License
The general trade license issuing authority is the local government. Depending on location, it can be either city corporation office/ward council/ UP office or municipal authority.
There are a few key documents to be attached with the general trade license application form. These include – NID of the applicant, TIN, VAT registration, incorporation certification, bank statement, and clearance certificate from BIDA.
These are the must-have documents for the application. Depending on the nature of the business, the issuing authority may require additional documents as well.
The process starts with submitting the application form along with the above attachments. After that, the concerned authority will dispatch the application for inspection. After successful inspection, the business needs to deposit the required fee.
It takes about 3 to 5 days after application to obtain the provisional license.
Application Process for Commercial Trade License
The commercial trade license is issued by the city corporation or the zonal offices under it. For other localities, the equivalent office issues the commercial trade license.
All the required documents mentioned in the general trade license are also applicable for the commercial trade license. However, there are some additional requirements as a commercial trade license is issued against a business entity.
The applicant needs to attach tax certification, partnership agreement (for multiple ownership), and a copy of passport if any authoritative position is held by a foreign individual in the business.
Applicants first need to obtain the K form from the city corporation or the zonal office. The rest of the application procedure is similar to the general trade license application.
However, there is an additional 50 BDT charge for the license book collection. There is an additional signboard fee which is 30% of the accrued license fee relevant to the business type.
Application Process for Manufacturing Trade License
The application authority for manufacturing trade license is again the city corporation or the relevant zonal offices under it. There are some additional document requirements along with the standard ones mentioned above.
First off, the applicant needs to provide a copy of the NOC from the local neighborhood/ward authority. Then there is the Fire Safety License. A copy of MoA and AoA should also be attached to the application.
For the manufacturing trade license, the I form should be collected from the relevant office. The rest of the process is exactly similar to the commercial trade license application process.
Application Process for E-Trade License
The E-Trade license introduced digitization of the trade license process of Bangladesh. The three types of trade licenses are obtained through the E-Trade license system. Within its scope, the relevant city corporations and zonal offices provide trade licenses.
To get started, the applicant has to visit the E-Trade license website which operates under the Local Government Division. From there, the applicant needs to select the “New Registration” option. The following page will contain a form for the personal details of the applicant. The subsequent page will contain a form detailing the business type and details. The applicant needs to correctly input the information in the relevant box.
A digital copy of the required attachments mentioned above needs to be uploaded along with the application based on the type of trade license. After successful completion of the process, the application will be forwarded for verification. Concurrently, a tracking number will be generated for the applicant to check the status of the application.
After verification, the applicant needs to pay the required fee and collect an online copy of the provisional license. Applicants can renew, reissue and even surrender their trade license from the same website.
The trade license is an essential document that enables any person to conduct business and other dealings legally in Bangladesh. Every concerned business should obtain its trade license to avoid any form of legal trouble.