Exporters Want Changes in CBI’s Forex Repatriation Rules

EghtesadOnline: Head of the Iran Chamber of Commerce, Industries, Mines and Agriculture has called on the government to revise stringent rules guiding repatriation of overseas earnings by non-oil exporters.

News ID: ۷۵۰۰۳۸

14 May 2020

Pointing to exporters’ difficulties in repatriating earnings as required by rules of the Central Bank of Iran, Gholamhossein Shafiei warned that “sticking to past methods will eventually hurt non-oil export”.

“If previous procedures are perpetuated, major exporters will simply walk away and will be replaced by others… this will undermine the non-oil export,” he was quoted as saying by the chamber’s news website.

Exporters have recently complained about their liquidity, paid earlier as VAT, being blocked by the Iran National Tax Administration.

As part of incentives given to non-oil exporters, their VAT is refunded a month after they repatriate 70% of their earnings.

This has become a matter of new debate between the exporters and the CBI in recent days. Exporters complain that they are unable to fully repatriate their earnings due to restrictions on transfer of money. The CBI, on the other hand, is disappointed with the (low) amounts of repatriated earnings.

Speaking at a regular meeting between government and private sector leaders on Tuesday, Shafiei criticized the government for being “indifferent toward costs being imposed on exporters.”

Interesting Proposal

Addressing the central bank, he said “if the CBI can bring back the forex resources, then we suggest exporters submit their overseas earnings to the CBI and it take charge and return the money back home.”

The government tightened rules on repatriating currency by exporters in the spring of 2019 after the United Sates imposed new sanctions on Iran’s oil, banking and shipping industries.

As per rules, exporters must declare and sell a significant portion of their overseas forex earnings, to CBI-affiliated NIMA system. This varies from 50% to up to 90% of the hard currency, depending on the size of earnings (exporters that earn less than €1 million per annum are exempt from selling their hard currency to the NIMA system).

Ordinary export companies must sell at least half their earnings in the secondary market. Petrochemical exporters must bring back at least 60% of their overseas earnings and sell it via Nima.

Exporters are also obliged to sell at least 20% of the total proceeds in cash to authorized moneychangers. The balance can be used to import goods, machinery and equipment either by the exporter or other third parties.