Industries will now be able to send a certain amount of money abroad as royalty and fees for technical knowledge, technical assistance and franchise without prior approval of the Bangladesh Investment Development Authority (Bida).
In a circulation on Sunday, the Bangladesh Bank asked the authorised dealer (AD) banks to follow the guidelines issued by the Bida for sending remittances abroad as royalty and other fees.
The circular said that AD banks should observe instructions of the Bida guidelines to make permissible remittances as per Schedule-1 appended with the said guidelines.
Schedule-1 of the Bida guidelines permits remittances of royalty, technical knowledge/technical know-how, and technical assistance fees at 6% of the total accumulated C&F value of imported machinery for new projects and 6% of the previous years' sales excluding VAT as declared in the income tax returns for projects under commercial operations.
In addition, the schedule-1 allows remittances of franchise fees and fees payable to contractors in a project, including advance payment.
In case of advance payment, the central bank circular advised the AD banks to observe the prevailing regulatory instructions of foreign exchange guidelines.
The circular requires transactions under the authorisation to be executed by one AD bank branch nominated by remitters.
The AD banks must ensure deductions and payments of source taxes, VAT, and other levies applicable against the remittances, the circular added.
Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank, told The Business Standard, "It would help smooth remittances of royalty, technical knowledge/technical know-how fees, etc without the case to case approval from the Bida."
He suggested some major changes such as reduction in cost of time of land registration, approval for power and gas connections, and other investment-related government permissions.
"If we do this, then Bangladesh can improve the ease of doing business, which attracts foreign investment," he added.