Royalty, fee repatriation process eased for private firms

Jasim Uddin | Published: 23:27, Mar 22,2021


The Bangladesh Investment Development Authority has eased procedures for repatriation of royalty, technical assistance and other related fees by private industrial enterprises to foreign companies to attract and facilitate foreign direct investments in the country.

BIDA under the Prime Minister’s Office on Monday issued a circular with new guidelines on outward remittance repatriation for payment of royalty, technical knowledge/technical know-how fees, technical assistance fees and franchise fees-2020 allowing repatriation of outward remittance up to 6 per cent without prior approval of BIDA.

The new guidelines will facilitate entrepreneurs, mainly foreign investors, to remit royalty and other fees to their mother companies, sister concerns and foreign collaborators through reducing complexities and time in completion of the process, BIDA officials said. They said that the time of repatriation might reduce by at least 15 days under the new guidelines.

The cost of repatriation will also decline as BIDA will not charge any fees for the purpose, they said.

The guidelines have been issued by repealing all previous guidelines, circulars and orders on the issue to serve the purpose of clarifying processes and procedures for outward remittance repatriation by private industrial enterprises registered in Bangladesh, according to the guidelines.

According to the guidelines, an industrial enterprise having commercial operation will be allowed to remit up to 6 per cent of its previous year’s sales, excluding value-added tax, as royalty, technical knowledge/technical know-how and technical assistance fees directly through authorised dealer banks without the prior approval of BIDA.

An investor, however, will have to comply with some conditions, including complying with the provisions as stated in the contract between the firm and its foreign beneficiary company, for availing the benefit.

The enterprise will have to apply to BIDA for endorsing the contract immediately after signing and before any remittance takes place to avail the benefit.

‘One contract will require endorsement from BIDA only for once and can afterwards be used for multiple remittance transactions,’ the guidelines said.

Previously, investors were required taking approval from BIDA for each transaction and had to pay fees ranging from Tk 10,000 to Tk 1 lakh on the basis of amount of remittances.

According to the guidelines, the amount for a project under implementation is up to 6 per cent of the total accumulated C&F value of imported machinery of the concurrent year before going into commercial operation, the guidelines said.

Franchise fees more than $0.1 million will be allowed to be remitted in instalments, the guidelines said, adding that 50 per cent of the approved claim will be allowed to remit in the first year, 30 per cent in the second year and the rest 20 per cent in the third year.

Prior approval from BIDA will be required before remitting if the amount of remittance exceeds the limit, according to the guidelines.

BIDA may consider such proposals that generate significant continuing impact on the economy and have substantial value creation, generate significant number of employment, transfer advanced technology, enhance skills of local force and diversify agricultural, manufacturing and service sector of the country.

All proposals for outward remittance will be considered based on the value addition of the transaction, the guidelines said, adding that transaction of no or minimum value addition, transaction made without following arm’s length principle or transaction of rudimentary nature would be discouraged.

Fees will be allowed to remit by the local companies to their foreign collaborators usually on a yearly basis.

The Bangladesh Bank may look into the issues of remittances that are beyond the scope of BIDA and of the guidelines.

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