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Indenting agents hurt by importers trading without registration

Sarwar A Chowdhury
Despite repeated instructions from the finance ministry, the National Board of Revenue (NBR) has not initiated any steps to make it mandatory for importers to register before starting an import business in Bangladesh.
The import business in the country is open and does not require registration for importers or suppliers. The foreign suppliers who have opened local offices here or do business through agents do not need to pay taxes, except customs duties, to the government on their incomes from sales here.
Foreign exporters also do not need to be registered or have trade licences here. Their local agents also rarely have any registra- tion and most remain out of the tax net.
"As a result, the country is losing revenue on one hand while the indenting business is being affected on the other," said KMH Shahidul Haque, president of Bangladesh Indenting Agents'Association.
An indenting agent is a company that collects commissions on sales, and does not buy and resell. Local indenting firms act as representatives of overseas exporters and get commission from them in foreign currency.
On various occasions, Finance Minister AMA Muhith wrote to NBR as well as the commerce ministry, instructing them to take steps in this regard.
Haque said: "We don't receive any commission from the local importers." He said doing business has become difficult in the face of uneven competition caused by the open import policy, namely through Direct Proforma Invoice (DPI).
"The discrimination in the import business is gradually destroying the indenting business," he said. "We want a level playing field."
Import of goods through die DPI is also out of the country's tax net.
"As a result, the government is being deprived of huge revenue, while the DPI-issuing people are not accountable to anyone and are also out of the tax net," Haque said.
"The open import policy has created scope for under-invoicing."
Industry-people said compulsory registration would bring discipline in the import business and increase foreign currency earnings by the local indenting firms.
If registration from die central bank or from die trade bodies is made mandatory, Bangladesh Bank will also have information on the import business activities in the country.
Haque said 80 percent of trade was operated through indenting agents in the past, but the trend began to decline since 1986-87 when the policy to open letters of credit through the DPI was initiated.
NBR Chairman Ghulam Hussain said they informed the finance minister of the latest situation.
"The issues are included in the budget exercise. If any step is taken, it will be through the budget."
However, NBR officials said the issues related to the indenting business are technical and critical. Several ministries are also related to the issues and NBR has discussed the matter with them, the officials said.
Meanwhile, the NBR has waived a 15 percent VAT on indenting agents, who were demanding withdrawal of the VAT for a long time in a bid to encourage businesses to bring foreign currency through a formal channel into the country.
The VAT wing of the tax administrator issued a statutory regulatory order by waiving VAT on the foreign income of the indenting agents.
Earlier, the finance minister also asked the NBR to take steps to remove VAT on indenting agents'