NBR mulls extending bond licence validity to 3 years
To get the benefit of the three-year validity period of bond licences, businesses must have at least two years of audits and at least one year of exports during the period
The National Board of Revenue (NBR) is planning to extend the validity period of bond licences for exporters from the current two years to three years.
The revenue board discussed extending validity of the licence in a meeting on 19 October, according to the minutes.
Revenue officials believe that this will provide some relief for businesses.
To get the benefit of the three-year validity period of bond licences, businesses must have at least two years of audits and at least one year of exports during the period.
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However, the revenue board has not yet approved the request of businesses under the bond facility to conduct audits every two years instead of annually.
Exporters believe that if the decision to extend the validity period of bond facilities is taken with these conditions, it will not bring any benefits to exporters.
Mohammad Hatem, the executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The Business Standard, "Our demand is to conduct audits every two years instead of every year. This is because annual audits lead to confusion and increased costs. However, not doing so will not reduce harassment."
Additionally, he believes that the condition of having to make imports within the three-year licence period is not reasonable. He said, "If someone fails to make imports for any reason, what will happen? Will the license be cancelled? If that happens, then someone who wants to make imports after the fourth year will have to obtain a new licence. This means incurring additional costs."
"These are all money-making schemes," he stated.
NBR officials, however, said extending the licence period can increase the number of non-compliant entities and increase the risk of tax evasion.
Importers can avail the duty-free facility by importing goods and storing them in a designated warehouse, provided that they manufacture goods for export using raw materials brought in under the tax facility. This is known as the bonded warehouse facility or bond facility.
Some industries in the country, including the garment sector, are benefiting from this facility. However, there are complaints that in some cases, there are significant inconsistencies in the implementation of the regulations, and goods imported under the duty-free facility are being sold in the local market. This has led to concerns among local manufacturers who are competing with those who use the same locally made goods but without paying taxes.
