Bida eases royalty, franchise fee transfer abroad

Domestic and foreign companies will now be able to send a certain amount of money abroad as technical assistance fee, royalty, or franchise fee without prior approval of the Bangladesh Investment Development Authority (Bida).

However, it will require approval from the authorities concerned to send more than the prescribed amount of 6% of a company's previous year's turnover or 6% of a new company's machinery import cost for the current year.

To facilitate the business environment, the Bida has issued a notification in this regard.

Earlier, the amount of money that a company can send abroad from Bangladesh as technical assistance fees had not been determined.

The Authorised Dealer (AD) Banks used to send the same amount of money abroad as Bida allowed to do so.

The new circular said technical knowledge/technical knowhow or technical assistance fee(s) up to $10,000 per agreement will be allowed to remit once a year.

In order to pay royalties, technical assistance fee, franchise fee, advance fee and contractor payment for various projects, a prior approval from the Bida was earlier required.

As regards royalty and technical fees, the Bida said for projects under implementation, not exceeding 6% of the total accumulated C&F value of imported machineries of the concurrent year(s) before going into commercial operation and for projects under commercial operation, not exceeding 6% of the previous years' sales (excluding Value Added Tax) as declared in the income tax returns could be sent.

About franchise fee, the Bida circular said fees more than $0.1 million will be allowed to be remitted in installments. The 50% of the approved claim will be allowed to remit in 1st year, 30% in 2nd year and the rest 20% in 3rd year.

All advance payments, if allowed before generating revenue, must be adjusted within one year of going into commercial operation by the entity.

Fees payable to Contractor(s) in a project in case of recurring payments required by any obligatory agreement, a maximum 6% of sales revenue (excluding Value Added Tax) as declared in the previous year's income tax return or VAT return (VAT return will be considered only for the first year in case of new project) may be allowed.

The payment of such fee(s) may be allowed on quarterly, semi- annually and annual basis as stipulated in the agreement, said the Bida.