Central Bank of Iran Eases Currency Rules for Exporters
EghtesadOnline: The Central Bank of Iran has announced a new set of rules for repatriation of export earnings in the current fiscal (March 2019-20).
In a directive published on the CBI website Monday, it outlined procedures for returning export earnings from the previous fiscal (March 2018-19) and recommended ways to non-oil exporters on how to fulfill their currency commitments.
In general terms, the new policies appear to be more favorable to exporters as they lack the ambiguities of previous procedures, which at times confused traders over the extent of their currency commitments.
For example, the CBI had set multiple ceilings for currency earnings and obliged exporters to return a portion of it based on declared ceilings, Financial Tribune reported.
Based on the new policies, a minimum of 60% of the forex earnings from export of petrochemicals must be sold via the Nima system (Persian acronym for integrated forex deal system).
Nima is the platform where exporters sell their currency earnings to companies importing non-essential goods.
Up to 10% of the total export earnings of petrochemical companies should be sold in banknotes to the local bureaux exchanges.
Petrochemical exporters can use their remaining earnings to import goods, machinery and equipment for their companies.
Exporters of non-petrochemical goods are obliged to sell at least 50% of their earnings on Nima and 20% in cash to the money changers. The balance can be used for importing goods either by the exporting firm or third parties.
The CBI has extended the deadline to July 22 for groups of exporters who have not returned their earnings from the last fiscal.
These exporters should meet their currency repatriation commitment as per previous fiscal procedures. In the earlier rules all exporters whose export earnings were below $1 million were allowed to sell their currency in exchange shops or use it to import goods.
Exporters with earnings between $1-3 million were required to sell 40% of their earnings on Nima and a maximum $1.5 million to the bureaux exchanges.
Exporters with earnings between $3-10 million were allowed to sell up to $2 million to exchange shops and 40% on Nima.
Finally, exporters whose earnings exceed $10 million are can sell a maximum $4 million to money changers and 70% on Nima.
Chamber Wants Deadline Extension
Iran Chamber of Commerce, Industries, Mines, and Agriculture urged the CBI last week to extend the deadline for repatriating earnings from exports (except for petrochemicals and natural gas condensate) in the past fiscal to September of this year.
As part of attempts to encourage exporters to return more of their earnings, the Iran National Tax Administration has also announced some tax exemptions for law-abiding exporting firms. For example, export companies will not pay tax on their export income if they fulfill their currency commitments on time.
INTA will also refund the value added tax to such exporters within a month from the date of repatriation.
According to the directive, the CBI will send the names of exporters who respect the currency repatriation rules to INTA for the tax breaks.
The CBI reiterated that exporters should return their earnings through ways announced by the regulator.
According to current rules, export earnings should be returned via one of the following ways: selling currency on Nima, cash transfers through hawalah, selling to bureaux exchanges, and using the currency to import goods and machinery either by the exporting company itself or any other third party.