Summary:

By issuing the new guidelines on outward remittance repatriation for payment of royalty, Bangladesh Investment Development Authority ( BIDA ) has repealed all the previous guidelines on repatriation of royalty and eased the procedure of technical assistance and franchise fees for the private industrial enterprises to the foreign companies to facilitate new direct foreign investment.

Content:

According to the new guidelines published by BIDA , the companies in commercial operation can repatriate its outward remittance up to 6.0 per cent of the previous year’s sales, excluding  value added tax, technical knowledge/ technical know-how fees, technical assistance and franchise fees-2020 without the approval of BIDA. This guideline has been published to increase foreign direct investment by facilitating the foreign investors.

Without taking the approval of BIDA, they can remit directly through authorized dealer banks. But,  will have to comply with some conditions, including the contract between the firm and its foreign beneficiary company to avail this advantage. And also, this contract will also require endorsement from BIDA at the first time and later can be used for multiple remittance transactions as stipulated by the guidelines. Previously, the fees for each approval were based on the amount of the remittance and ranged from Tk 10000 to 1 lakh.

Further, the amount for a scheme under execution is up to 6 per cent of the total accrued C&F value of imported machinery of the contemporary year before going into commercial operation, the guidelines said.

Additionally, franchise fees more than $0.1 million will be allowed to be remitted in approximately three installments, 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.

However, prior endorsement from BIDA will be compulsory before remitting if the amount of remittance exceeds the limit despite having BIDA’s endorsement on their agreement, according to the guidelines.

Moreover, to avail this facility, the private industrial enterprise must be registered by BIDA and defined in section 15(3) of the BIDA Act 2016. Plus, whether the proposal for the outward remittance transactions added some value or not would be considered, the guidelines said.

Additionally, the transaction of no or minimum value addition, transaction made without following arm’s length principle(the arm’s length principle states that the price charged in a transaction between two related parties should be the same as the price charged in a comparable transaction between two unrelated parties)or transaction of undeveloped nature would be downcast.

The essence of the new guideline was the long awaited demand of the foreign investors. That is why BIDA has published the guideline for their convenience. They said that the time of repatriation might reduce by at least 15 days under the new guidelines. The cost of repatriation would also be reduced as BIDA will not be charging any fees for this.

The local companies can remit the fees to their foreign delegates on a yearly basis not exceeding the mentioned amount as per the guidelines.

Any kind of unforeseen incident might be handled by Bangladesh Bank if it occurs beyond the scope of BIDA and the issued guidelines.

Pic and Article source: https://www.newagebd.net/article/133452/royalty-fee-repatriation-process-eased-for-private-firms