With many export-oriented firms facing losses for cancellation of export orders by buyers or other factors and sit with stock of raw materials, the National Board of Revenue (NBR) has relaxed rules regarding holding period of raw materials imported duty-free by firms under bonded warehouse licence.
Additional time will be granted for export-oriented factories with bonded warehouse licence if the quality of raw materials remain good and the firms’ get buyers abroad.
The decision is welcomed by the exporters as it facilitates exports and cuts the exporters’ risk of increased liabilities.
“It is a good decision,” said Faruque Hassan, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the country’s one of the largest trade associations representing readymade garment industry, which accounts for nearly 84 per cent of annual exports of $38.7 billion.
He said exporters bring in raw materials in order to make finished products for shipping. On many occasions, buyers cancel orders, go bankrupt.
Under such circumstances, raw materials imported to make exportable products become liabilities for exporters and they have to sell the items in the local market after paying duty and taxes to the NBR.
There is no benefit if the products are not made and exported, he said.
Hassan, also managing director of Giant Textiles Ltd, said the NBR’s latest decision will be instrumental to increase exports.
In general, the NBR grants a 24-month time to the export-oriented factories to hold raw materials to make products and exports.
The permission to retain raw materials for additional six months comes from the Customs Bond Commissionerates (CBCs)—one in Dhaka and another in Chattogram—and from the NBR, said an official of the tax administrator.
In its latest order issued last week, the NBR said it will consider granting additional bonding period for raw materials if the exporters apply.
Export-oriented firms in the export processing zones, economic zones and hi-tech parks will also get scope to apply for time extension if bonding period expires.
The NBR will consider the applications case to case basis, according to the notification.
“We have done it to facilitate exports,” said the NBR official.
Md Saiful Islam, president elect of the Metropolitan Chamber of Commerce and Industry, termed the NBR decision timely.
“The latest decision will not affect revenue. If such flexibility on the basis of reality continues, exports will grow,” he said.
