EghtesadOnline: A package was announced Monday by the CBI outlining procedures for repatriating export earnings in the current fiscal year that ends in March 2021 and also earnings of the past two years.
The package was announced by the Central Bank of Iran and drafted in coordination with relevant government bodies, including the Oil Ministry, Industries Ministry, Economy Ministry and the Plan and Budget Organization, the CBI’s website reported.
Among other things, the new producer says all non-oil exporters must bring back at least 80% of their earnings in “foreign exchange hawala” and maximum 20% in hard currency. The proceeds must be sold via the secondary forex market to banks and authorized exchange bureaus.
In the new rules, the regulator does not discriminate between petrochemical exporters and other exporting firms.
Manufactures exporting their products are allowed to use maximum 30% of the overseas earnings for their import needs but need to sell the remaining in forex hawala in the secondary market.
Exporters are required to register their forex hawala with the Integrated Forex Deals System (known by its Persian acronym Nima).
Hard currency must be registered at the SANA foreign exchange data system that records the average forex rate from across exchange bureaus.
Drawing parallels between the new and past rules, it appears that the CBI has made its procedures more stringent and tightened restrictions for exporters.
In the past, exporters were required to sell at least half of their export earnings in the secondary market. Petrochemical companies were obliged to bring back at least 60% of their earnings and sell it via Nima.
Observers and officials blame users of the so-called “rented commercial cards” and novice exporters for failure to repatriate their earnings. It is often said that reliable traders uphold their financial commitments on time and are less likely to breach the rules
Previous rules stipulated that at least 20% of the total proceeds sold in the secondary market must be in cash, and the balance could be used to import goods, machinery and equipment either by the exporting firm or a third party.
Exporters have been given four months to return their earnings starting from the date their export permit is issued by the customs authorities.
The deadline, however, can be extended only in “exceptional cases” subject to valid documents and upon the request of the Industry Ministry plus CBI approval. The grace period applies to the export of a limited number of goods, the CBI said without elaboration.
To reward law-abiding exporters, the government has allowed exporters who return their earnings within three months from the date of export to offer earnings equivalent of 90% of the total export value.
On the flip side, exporters who fail to return their earnings on time will have to fully offer their forex income on the secondary market at either rates valid on the date the deadline expired or on the day of actual repatriation, whichever is lower.
It is worth noting that exporters are required to return 70% of their total export value in fiscal 2018-19, and 80% of their export value in the last fiscal year.
However, the regulator insists that the repatriated earnings for the current fiscal year should be the full amount of the export, an issue that has become a bone of contention between the CBI and export companies.
As per law, export value is assessed by the customs authority, but exporters usually complain that it overestimates export value and that they actually make less.
In the new rule, the Ministry of Industries will rate exporters based on their credibility and commercial background and when needed impose restrictions on how much they can export.
Accordingly, the Industries Ministry will monitor the foreign trade conducted by commercial cards.
Observers and officials blame users of the so-called “rented commercial cards” and novice exporters for failure to repatriate their earnings. It is often said that reliable traders uphold their financial commitments and are less likely to breach the rules.
In recent weeks it has been officially reported that the government is planning to restrict exports by newcomers.
Hamid Zadboum, head of Iran’s Trade Promotion Organization, told a news conference last week that exporters who have recently got their commercial cards will be allowed to export goods not more than $500,000 in the current fiscal year.
Provisions in the new package stipulate that exporters who default will be barred from doing business and possibly be prosecuted.
Penalties will include parties “directly or otherwise related to the exporters’ failure to return the forex earnings”.
The penalties and restrictions will vary for administrative bodies. For example, the Industries Ministry will stop issuing or renewing commercial cards of defaulters. It is authorized to also suspend any type of import, export, production and guild permit.
Likewise, the Islamic Republic of Iran Customs Administration will block exporters’ access to customs services, including, but not limited to, rejecting export guarantees.
The Iranian National Tax Administration will cancel all tax incentives to exporters and the central bank will not allocate foreign currency for the import needs of exporting companies.
Similarly, banks will refuse service to unruly and lawless exporters, such as issuing export guarantees or granting other financial assistance. Exchange bureaus too have been barred from dealing with export companies that fail to meet their financial commitments.