The National Board of Revenue has amended the Bangladesh Economic Zone Warehousing Station Rules relaxing the provision related to sales of finished products in the local market for consumption.
Factories located in the economic zones (EZs) will now be able to sell their products in the local market after paying duties and taxes applicable only on raw materials imported under the bonded warehouse facility instead of finished goods, according to the amendment.
Customs wing of the revenue board on October 24 issued a statutory regulatory order incorporating the provision of selling finished products for home consumption with the payment of tax for imported raw materials.
Officials of the NBR on Sunday told New Age that all industries in the EZs irrespective their export status would enjoy bonded warehouse facility under which they would be allowed to import raw materials without paying duties and taxes for the purpose of production of finished goods.
Factories can also collect the required raw materials from the local market.
Currently, only 100 per cent export-oriented industries and deemed exporters along with factories in the Export Processing Zones enjoy duty-free raw materials import facility, they said.
Bonded industries are usually barred from selling their products in local market. Industries in the EPZs under the Bangladesh Export Processing Zone Authority can sell 10 per cent of their total production in the local market for home consumption.
But the Bangladesh Economic Zone Warehousing Station Rules-2015 allowed sales of products with a tough condition under which the products to be produced in the EZs will be considered as imported ones in case of selling those in local market.
Producers will have to pay the duties and taxes on finished goods at the rate which is applicable on the imported goods, it says.
But according to the amended rules, producers will have to pay the duties and taxes only on raw materials imported duty-free under the bonded warehouse facility instead of finished goods, said a high official of the NBR.
In addition, value-added tax will also be applicable on the goods to be sold in local market, he said.
Export-oriented industries, however, will be able to sell only 20 per cent of their total products in the local market with payment of taxes, according to the SRO signed by NBR chairman Md Nojibur Rahman.
There will be no duties, VAT and other taxes on exports of goods from the EZs.
Customs officials said that the NBR amended the rules as per instruction of the Prime Minister’s Office to facilitate investment in the EZs.
As per instruction, all factories will gradually be relocated in the EZs and then there will be no discrimination between the export-oriented and local industries.
But until all industries are shifted to the EZs, imposition of duties and taxes on finished goods for selling in local market will significantly increase the cost of production of industries in the EZs compared with those outside the EZs, they said.
Bangladesh Economic Zone Authority is working to establish 100 EZs across the country by 2030. A number of EZs have already started their development works.
Many investors have also started construction of factories in some private EZs.
There will be both export-oriented industries and domestic consumption industries at the EZs.
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