Regulatory Alerts2021-07-27
Added
FEPD Circular No. 26: Opening of bank accounts abroad by resident contracting firms jointly with non-resident co-partners
Resident contracting firms are authorized to open foreign currency bank accounts abroad jointly with non-resident co-partners to receive payments and short-term loan proceeds for projects awarded by foreign agencies, provided collaterals from Bangladesh are not used. These firms must maintain designated accounts with Authorized Dealers in Bangladesh, submit quarterly progress reports and bank statements within 10 days after each quarter, and repatriate surplus earnings within one month of project completion. Authorized Dealers must report account details to Bangladesh Bank within one month of opening and upon closure, while ensuring tax deductions and crediting eligible portions to ERQ accounts or Taka accounts as applicable.
Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka www.bb.org.bd FE Circular No. 26 Date: July 27, 2021 All Authorized Dealers in Foreign Exchange in Bangladesh
Dear Sirs, Opening of bank accounts abroad by resident contracting firms jointly with non-resident co-partners
Attention of Authorized Dealers (ADs) is invited to paragraph 4, chapter 13 of the Guidelines for Foreign Exchange Transactions-2018, Vol-1 (GFET) and its subsequent circulars in terms of which foreign currency accounts are allowed to be opened in the names of local and joint venture contracting firms to execute projects in Bangladesh.
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To facilitate resident contracting firms to implement projects awarded by project implementing agencies abroad, it has been decided that they may open bank accounts in the respective countries jointly with non-resident co-partners to credit payments received against the works. Short term loans proceeds against the project works from external sources may be credited in the accounts. For availing such loans, collaterals from Bangladesh are not admissible. Balances held in these accounts are useable for settlement of project related bonafide payments abroad.
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Resident contracting firms shall maintain bank accounts with ADs designated for the transactions with regards to accounts opened abroad in accordance with 2 above. Accordingly designated ADs shall have arrangements with resident contracting firms to the effect that: (a) Resident contracting firms shall submit quarterly progress reports of the project works along with bank statements to designated ADs regarding transactions in the accounts within 10 days of the following month at the end of the quarter. (b) Within one month of the completion of the project works, resident contracting firms shall repatriate their surplus earnings to Bangladesh through designated ADs. However, specified fund as per contractual agreements with the project agencies abroad may be retained in the accounts for the agreed period.
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In case the joint venture bank accounts are not workable as per underlying contracts, resident contracting firms may arrange escrow accounts abroad, if warranted, to be operated by escrow agents subject to observance of the instructions stated above. Continued to page no. 2
-2- 05. Out of the repatriated funds, ERQ accounts may be credited at the option of resident contracting firms up to the portion admissible for service exports. The remainder needs to be encashed and credited in Taka accounts of resident contracting firms. In all cases, ADs shall ensure deduction and payments of applicable taxes and follow routine reporting formalities to Bangladesh Bank. 06. Within one month from the date of opening bank accounts abroad, designated ADs shall intimate Bangladesh Bank with detailed information. Bangladesh Bank shall also be intimated on close of project works including closure of the accounts.
Please bring the contents of this circular to the notice of concerned constituents.
Yours faithfully, (Kazi Rafiqul Hassan) General Manager Phone: 9530123