The government is planning to slash the supplementary duty (SD) on import of fabrics in a bid to deal with the problem, amid the allegation that the fabrics imported for the 100 per cent export-oriented garment industries under the bonded warehouse system are often smuggled out. According to sources at the National Board of Revenue, the NBR Bond offices from across the country have sent a proposal for reducing the duties on the import of fabrics for selling those locally.
‘Considering the proposals from the field offices, the NBR might reduce the supplementary duty for imported fabrics and this announcement is likely to come in the next budget,’ an NBR official told the news agency.
Finance minister AMA Muhith is scheduled to announce a budget of around Tk 2,50,000 crore for the financial year 2014-15 on June 5 in the Parliament, setting the revenue target at Tk 1,49,000 crore.
The NBR official said the government was incurring a loss of huge revenue in duties and taxes as the imported fabrics are smuggled out of the country though there was no study in this regard.
He also mentioned that the growing trend in smuggling out of fabrics was a big threat to the local fabric industries that employed thousands of people apart from the huge investment.
According to the system, the export-oriented industries are allowed to import duty-free fabrics under the bonded warehouse system.
Eighty per cent of the fabrics that come under the system have to be exported while the rest 20 per cent is allowed as wastage.
The bonded warehouse facility is important to export-oriented industries, especially the garment factories, in reducing lead-time and keeping product prices competitive.
A section of businessmen misuse the bonded warehouse facility by selling the duty-free imported raw materials and finished goods to the local market.
Licence holders also sometimes use fake addresses to escape the monitoring mechanism of the customs authorities, while some others do not maintain records of their export and import activities to abuse the facility.
The bonded warehouse license is given to import raw materials without any duty charges against a commitment to export the finished products, which makes exports more competitive.
All the imported goods are stored at the bond holder’s warehouses, and in case of failure to export, the importers are to pay duty charges and taxes for the rest of the goods imported.
According to a NBR notification, export-oriented companies, which import such items should mention ‘Import Under Bond’ while opening the letters of credit, but some traders are hardly bothered about that.
If anyone now imports fabrics for selling it locally that person have to pay 25 per cent customs duty, 20-45 per cent supplementary duty, four per cent VAT, five per cent advance income tax and five per cent regulatory duty.
Allegations are often raised against those who import fabrics under the bonded warehouse system smuggle out the fabrics, harming the businessmen who import fabrics by paying all sorts of duties and taxes.
-With New Age input
