Bangladesh makes firms’ outward payments easier

The Bangladesh Bank on Thursday relaxed the rules for firms’ outward payments against the services they avail from external sources.

But the central bank did not raise the ceiling a company can use for cross-border payments annually. The present limit is only 1% of a firm’s annual sales.

“To facilitate the transactions, it has been decided to accord general authorisation to ADs [bank branches that are allowed to do foreign currency transactions] to effect remittances on account of software maintenance/support fees,” reads a circular.

“Accordingly, ADs shall no longer need to seek a first-time approval from Bangladesh Bank,” it said.

However, ADs have to observe some specific instructions: They shall have to be ensured of the concerned software having legitimate licence; ADs shall obtain valid agreements for the maintenance/support services executed with foreign service providers; and remittance requests from the remitters shall be supported by invoices.

Also, there must be an undertaking from remitters to the effect that they have not remitted the payments from other ADs and shall not do the same in future.

Remitters will bring back the remitted amount or its parts in case of non-receipt or partial receipt of services.

Regulations regarding payments of tax at source, value added taxes and other levies applicable on the payments also need to be complied with.

With this circular, businesses will be able to pay the fees up to 1% of their annual turnover. Previously, they had to obtain the central bank’s approval to send money for the services abroad other than payments for training and consultancy.

Businesses have welcomed the move saying that it will reduce their hassle. However, they are demanding for an increase in the limit.