Custom Bonded Warehouse Facility

Wpfreeware 6:49 AM Regulators of the Financial System

Custom Bonded Warehouse Facility in Bangladesh

In Bangladesh, custom bonded warehouses play a crucial role in facilitating international trade by allowing businesses to store imported goods without paying immediate duties and taxes. These facilities are particularly significant for the country's export-oriented industries, such as the garment sector, which relies heavily on efficient logistics and storage solutions.

Bonded warehouses in Bangladesh can be located both inside and outside Export Processing Zones (EPZs). Those inside EPZs often offer additional incentives and benefits. To use a bonded warehouse, businesses must obtain a bond license from the Customs Bond Commissionerate, which allows them to import goods under a bonded regime without immediate duty payment. Goods can be stored for up to two years, after which they must be either exported or duties must be paid if they are to be sold domestically.

For businesses looking to leverage these facilities need to understand the regulatory framework and the specific services offered by bonded warehouse authority.

Custom Bond Practices in Bangladesh

Custom bond practices in Bangladesh refer to the procedures and facilities provided by the National Board of Revenue (NBR) to facilitate duty-free importation and exportation for businesses, particularly those in export-oriented industries. These practices are designed to enhance the competitiveness of Bangladeshi exporters by providing various fiscal incentives and simplifying the logistics of international trade.

Key Custom Bond Practices

  1. Bonded Warehouses:

    • Businesses can store imported raw materials, components, and finished goods without paying import duties or taxes until these items are moved out of the bonded area for local consumption.
    • Bonded warehouses help manage cash flow and reduce upfront costs for importers and exporters.
  2. Back-to-Back Letter of Credit (LC):

    • Export-oriented industries, especially the garment sector, use back-to-back LCs to import raw materials duty-free, provided they are used to produce goods for export.
    • This mechanism allows manufacturers to finance the import of raw materials with the assurance of payment from the export proceeds.
  3. Duty Drawback:

    • Exporters can claim a refund on duties and taxes paid on imported materials used in the production of export goods.
    • This reduces the cost burden and improves the profitability of exporting businesses.
  4. Temporary Importation:

    • Temporary importation schemes allow companies to import goods temporarily without paying duties, as long as these goods are re-exported within a specified period.
    • This is beneficial for sectors that require foreign machinery and tools for production processes.
  5. Special Bonded Warehouse (SBW) Facility:

    • Export-oriented sectors, particularly readymade garments, are provided with special bonded warehouse facilities that allow duty-free import of raw materials and capital machinery.
    • These facilities are subject to specific compliance and monitoring by customs authorities.

In summary, custom bond practices in Bangladesh provide critical support to export-oriented businesses by offering financial incentives, reducing operational costs, and streamlining import-export procedures. These measures help boost the country's export performance, attract investment, and promote industrial development.

The application procedure for obtaining a custom bond license in Bangladesh involves several steps. This license allows businesses to import goods without paying duties and taxes immediately, provided the goods are used for export production. Here is a detailed outline of the application process:

Step-by-Step Procedure for Custom Bond License Application

  1. Preparation of Documents:

    • Company Registration Documents: Copies of the Certificate of Incorporation, Memorandum of Association, and Articles of Association.
    • Trade License: A valid trade license from the relevant local authority.
    • TIN and VAT Registration: Tax Identification Number (TIN) certificate and VAT registration certificate.
    • Bank Solvency Certificate: A certificate from the company’s bank indicating financial stability.
    • Factory Layout Plan: A detailed layout of the factory premises approved by the relevant authorities.
    • Fire Safety Certificate: Certification from the Fire Service and Civil Defense authorities.
    • Environmental Clearance Certificate: If applicable, a certificate from the Department of Environment.
    • Bonded Warehouse Layout Plan: A layout plan of the proposed bonded warehouse area.
  2. Application Submission:

    • Online Submission: Many steps in the application process can be initiated online through the National Board of Revenue (NBR) or the Bangladesh Customs website.
    • Application Form: Complete the specific application form for a bonded warehouse license, which can be obtained from the NBR or Customs websites.
    • Supporting Documents: Attach all the required documents as listed above.
  3. Pre-Approval Inspection:

    • Customs Inspection: After the initial submission, customs officials will conduct an inspection of the factory premises and the proposed bonded warehouse.
    • Verification: The inspection team will verify the layout, safety measures, and storage facilities to ensure compliance with regulations.
  4. Approval Process:

    • Review by Customs Bond Commissionerate: The application and inspection report will be reviewed by the Customs Bond Commissionerate.
    • Committee Approval: The application might be placed before a committee for final approval, which includes representatives from the NBR, Bangladesh Bank, and other relevant authorities.
  5. Issuance of License:

    • Grant of License: Once approved, the custom bond license will be issued to the applicant.
    • Notification: The company will be notified, and the license will include terms and conditions that need to be adhered to.
  6. Post-License Compliance:

    • Record Keeping: Maintain proper records of all bonded goods, including import and export documentation.
    • Regular Audits: Be prepared for periodic audits and inspections by customs authorities to ensure ongoing compliance with bond regulations.
    • Renewal: The custom bond license typically requires periodic renewal, which involves re-submitting some documents and possibly undergoing another inspection.

Key Points to Remember

  1. Accuracy: Ensure all documents and information provided are accurate and complete to avoid delays.
  2. Compliance: Strictly follow all regulatory requirements and guidelines provided by the NBR and Customs Bond Commissionerate.
  3. Timeliness: Submit all applications and respond to any queries from customs officials promptly to expedite the process.

By following these steps and maintaining compliance with regulations, businesses can successfully obtain and maintain a custom bond license in Bangladesh, facilitating smoother international trade operations.

Click the links for application related documents and information

  1. General Rule of Custom Bond
  2. Required document lists
  3. SRO 194/2020 Regarding Recquired Documents
  4. Process Map for Getting a New Bond License
  5. Process Map Explanation
  6. Application Process
  7. Bonded Areas

For more information and latest updates:

  1. Customs Bond Commissionerate Licensing Rules
  2. NBR Website

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