NBR tightens conditions of bond licence issuance

Jasim Uddin | Published: 23:01, Jul 04,2020

 
 

The National Board of Revenue has tightened the conditions of issuing bonded warehouse licence to prevent misuse of duty-free import facility under bond licence.

The new conditions will also prevent small and fake companies from getting the licence for import of raw materials duty-free, said NBR officials.

Applicants will now have to submit a total of 23 documents, instead of previous 14 documents, with their applications to the Customs Bond Commissionerates for getting bond licences.

Customs wing of the revenue board on June 30 issued a statutory regulatory order amending the Bonded Warehouse Licensing Rules-2008, incorporating a number of conditions, including the minimum size, capital, and lifespan of the factory, the applicant must fulfil for getting the licence.

According to the new conditions, the size of the factory and warehouse must be at least 5,000 square feet and the paid-up capital of the limited company must be Tk 1 crore for being eligible for the licence.

If the nature of ownership of the applicant entity is single or partnership, its annual turnover must be at least Tk 30 lakh.

The agreement of factory rent should be for five years if the factory is established at a rented place.

TINs and private investor (PI) visa of foreign directors of the companies, whether they stay in Bangladesh or not, must also be submitted with the application, the SRO said.

It also said that the factory must have power connection in its own name.

CBC of the NBR issues bonded warehouse licence, commonly known as bond licence, mainly to 100 per cent export-oriented industries offering duty-free raw materials import benefits with some conditions.

The conditions include that manufacturers must export the finished goods produced using the raw materials and in no way they should sell the raw materials in the local market.

The licences are issued under the rules framed in 2008.

Previously, exporters required to submit documents related to registration, taxpayer’s identification number, value-added tax licence, trade licence, fire licence, recommendation letter of the trade body concerned, design of the proposed bonded warehouse, deeds of factory ownership or lease document and a declaration of being compliant.

Officials said that the conditions could not prevent fake companies from getting bond licences which was the major reasons for misuse of the facility.

There are allegations that many companies sell raw materials imported under duty-free facility in local market instead of producing goods and export.

This practice deprives the revenue board of its due revenue while creates imbalance in local market as commercial importers cannot compete with duty-free raw materials, mainly fabrics for readymade garment industry.

A senior customs official said that the size and nature of the economy had also expanded significantly.

So, there should be restrictions in offering the duty free facility to prevent misuse and ensure that only genuine exporters can avail the benefit, he said.

According to the SRO, the price of any machinery should be at least Tk 40 lakh if the machinery is second-hand and the life span of machinery and spare parts should be at least 10 years.

Audit reports of all the sister concerns of the applicant factory must be updated, it said.

The provisions came into effect from July 1, the day the new fiscal year began, it added.

Till now, some 6,000 export-oriented manufacturers obtained bond licence from the CBC Dhaka.

Of which, around 4,000 bond licences currently remain active.

There is another bond commissionerate in Chittagong under which the number of bond licensees is around 1,400.

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