Commonly Used Terms

Commonly Used Terms

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Advance Income Tax (AIT)

The AIT is levied under Rule 17A of Income Tax Ordinance, 1984 at a flat rate of 5% on the assessable value. Some exemptions .are given via SRO No. 251-Law/Income Tax/2012, Dated 01-07-2012.

 

Advance Trade VAT (ATV)

ATV is applied only on commercial imports under "Bidhi­Mala-2012" by SRO No. 242-Law/2012/659-VAT dated 28-06-2012 by Section 22, 5 (2), 6 (4) and 31 of VAT act 1991. ATV is levied at a flat rate of 4% on "VAT paid value" ([assessable value plus customs duty plus regulatory duty plus effective SD] with 26.67% value addition).

                              

Anti-dumping duty

GATT’s Article 6 allows anti-dumping duties to be imposed on goods that are deemed to be dumped and causing injury to producers of competing products in the importing country. These duties are equal to the difference between the goods’ export price and their normal value if dumping causes injury.

 

Automated System for Customs Data (ASYCUDA)

ASYCUDA is a computerized customs management system that covers most foreign trade procedures. The system handles manifests and customs declarations, accounting procedures, transit, and suspense procedures, and generates trade data that can be used for statistical economic analysis.

 

Bill of Lading (B/L)

Abbreviation for Bill of Lading; a document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation and must be presented for taking delivery at the destination.

 

Back-to-Back Credit

Back-to-Back Credit Guarantee (standby credit) is arranged to secure a contractor's or seller's performance at the same time a guarantee (standby credit) is arranged to secure the owner's or buyer's payment. It is also called a back-to-back guarantee or reciprocal credit.

 

Bill of Lading (BL)

A document that establishes the terms of a contract between a shipper and a transportation company under which freight is to be moved between specified points for a specified charge. Usually prepared by the authorized agent on forms issued by the carrier, it serves as a document of title, a contract of carriage, and a receipt for goods.

 

Bonded goods

Goods stored in a warehouse (operated or approved by Customs), without the payment of duty until that duty is paid or the goods are exported or otherwise legally dealt with.

 

Bonded Warehouse

A warehouse authorized by Customs authorities for storage of goods on which payment of duties is deferred until the goods are removed.

 

Bound tariff

Maximum tax that can be levied on imports based on a bound tariff level. The bound tariff is the highest customs duty that can be charged on products imported from the territory of another Member.

 

C & F Agent

C & F Agent means "Clearing and forwarding agent. Any person, who is engaged in providing any service, either directly or indirectly, is concerned with the clearing and forwarding operations in any manner to any other person or includes a consignment agent.

 

CAD/cash against documents

Method of payment for goods in which documents transferring title is given to the buyer upon payment of cash to an intermediary acting for the seller, usually a commission house.

 

Cash in Advance

A method of payment for goods in which the buyer pays the seller in advance of the shipment of goods, usually employed when the goods are built to order such as specialized machinery.

 

Certificate of origin

A specific document identifying the goods is originated in a specific country. This certificate may also include a declaration by the manufacturer, producer, supplier, exporter, or another competent person.

 

CIF( Cost, Insurance and Freight)

“Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

 

Compound duty rate

A rate of duty incorporating both an ad valorem rate and a specific rate; e.g. 10% + $20/ton

 

Contraband

Forbidden by law to be imported or exported.

 

CFR Cost and Freight

“Cost and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel.

 

Customs clearing agent/broker

A person who carries on the business of arranging for the Customs clearance of goods and who deals directly with the Customs for and on behalf of another person.

 

Customs Duty (CD)

The charge levied on imports and listed in importing country's tariff schedules. Duties may be specific or ad valorem or a combination of the two (ad valorem with a specific minimum, or the greater of the two).

Customs duties are charged under the Customs Act, 1969 [Reference: First Schedule of Bangladesh Customs Tariff (BCT 2015)]. The Customs authority of NBR grants some special exemptions on the statutory rate for certain sectors through Statutory Regulatory Orders (SRO) and orders.

 

Customs Union

A group of countries forming a single customs territory in which (1) tariffs and other barriers are eliminated on substantially all the trade between the constituent countries for products originating in these countries, and (2) there is a common external trade policy (common external tariff) that applies to nonmembers.

 

Customs warehouse

A designated place where imported goods are stored under customs control without payment of import duties and taxes

 

Country of Origin

The country where the goods were mined, grown, or manufactured or where each foreign material used or incorporated in a good underwent a change in tariff classification indicating a substantial transformation under the applicable rule of origin for the good.

 

DAP Delivered At Place

“Delivered at Place” means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.

 

DAT Delivered At Terminal

“Delivered at Terminal” means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. “Terminal” includes a place, whether covered or not, such as a quay, warehouse, container yard or road, rail, or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

 

DDP Delivered Duty Paid

“Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

Destination Delivery Charge (DDC)

Abbreviation for ‘Destination Delivery Charge.’ A charge, based on container size, is applied in many tariffs to cargo. This charge is considered accessorial and is added to the base ocean freight.

Demurrage

A charge made by a shipping company or a port authority for failure to load or remove goods within the time allowed.

Dumping

The importation of goods into a country at a price that is less than the normal price in the country of exportation

Duty-drawback Scheme

A duty drawback scheme (often administratively demanding) is a form of Border Tax Adjustment whereby the duties or taxes levied on imported goods are refunded, in whole or in part, when the goods are re-exported. The idea is to reduce the burden on exporters while maintaining tariffs for revenue or protective purposes.

Excise duty

A tax on goods that are manufactured locally.

Export license

A government document that permits the ‘Licensee’ to engage in the export of designated goods to certain destinations.

 

Export Processing Zone (EPZ)

A designated area or region in which firms can import duty-free as long as the imports are used as inputs into the production of exports.

 

Export quota

Restriction or maximum limit that a country sets on the value or volume of sales of given export products (exports). Usually done to protect local producers and consumers from temporary shortages of certain materials, or to influence the world prices of specific materials or products. The WTO prohibits this mechanism.

 

FOB (Free On Board)

“Free On Board” means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

Foreign Inland Freight        

Foreign inland freight consists of the charges to move the freight from the foreign factory to the place of loading. Foreign inland freight charges are dutiable unless the terms of sale are “ex-factory” or the charges were incurred incident to the international shipment.

 

Freight Forwarder   

An independent business that assembles collects and consolidates less-than-truckload freight. Also, a person acting as an agent in the transshipping of freight to or from foreign countries and the clearing of freight through Customs for compensation.

 

GATT

General Agreement on Tariffs and Trade. A treaty was created following the conclusion of World War II. GATT's main objective was to reduce the barriers of international trade through the reduction of tariffs, quotas, and subsidies and it was superseded by the WTO as the international organization governing international trade.

 

Generalized System of Preferences (GSP)

The GSP is a system through which industrialized high-income countries grant preferential access to their markets to developing countries.

 

Harmonized Commodity Description and Coding System (HS)

The Harmonized System is an international nomenclature for the classification of products. It allows participating countries to classify traded goods on a common basis for customs purposes. At the international level, the Harmonized System (HS) for classifying goods is a six-digit code system. 

 

Import Quota

An import quota is a limit on the quantity of a good that can be produced abroad and sold domestically. Restriction, limit, or cap (in value or quantity) that a country sets on goods that it purchases abroad. If the volume or price exceeds the limit, the goods cannot be imported. The WTO prohibits this mechanism.

 

Irrevocable Letter of Credit

Letter of credit in which the specified payment is guaranteed by the bank if all terms and conditions are met by the drawee and which cannot be revoked without joint agreement of both the buyer and the seller.

 

Non-tariff barriers (NTB)

Barriers to an exporter to a foreign country that are not tariff/tax-related and include quarantine restrictions, quota, and other restrictions such as labeling. They make the importation of the goods into the country difficult and/or costly.

Rules of Origin

Rules of origin are used to determine the country of origin of a product for purposes of international trade. However, determining where a product comes from is no longer easy when raw materials and parts crisscross the globe to be used as inputs in scattered manufacturing plants. Rules of origin are important in implementing such trade policy instruments as anti-dumping and countervailing duties, origin marking, and safeguard measures. There are two common types of rules of origin depending upon the application, preferential and non-preferential.

 

Phytosanitary Certificate

A certificate issued by a Government agency (usually Agriculture) to satisfy import regulations of foreign countries indicating that a shipment has been inspected and found free from harmful pests and plant diseases.

 

Preferential tariff

Tariffs lower than those that a country usually applies for the importation of a good, granted to one or more countries when they belong to a certain geographical area, a free trade area, a customs union, or a group with specific characteristics, such as “developing countries” and “least developed countries.”

 

Regulatory Duty (RD)

Regulatory Duty is levied at a flat rate of 5% of assessable value for those items where SRD-CD is 25% [SRO No. 182-Law/2014/2520/Customs, dated 01-07-2014 (all 25% & some special cases where CD Rates 10%)]. In some selected HS codes & sectors RD are exempted by the same SRO.

 

Supplementary Duty (SD)

SD is levied on items listed under the VAT Act, 1991. The rate depends on the product. The VAT authority also issues exemptions on SD through the SROs [for the general exemption given by SRO No. 109-Law/2014/704-VAT, Table-1 (Import Stage), dated 05-06-2014, also an exemption of SD in the different sectors by different SRO & Order issued by VAT & Customs authority of NBR]. SD is levied on the basis of duty paid value (assessable value plus customs duty plus regulatory duty).

 

Tariff

A duty (or tax) levied upon goods transported from one customs area to another either for protective or revenue purposes. Tariffs raise the prices of imported goods.

Tariff ceiling

Any pre-set value or quantity, authorized for importation or exportation of given goods, during a specified period, with a reduction of the normal Customs duties, and beyond which the granting of the said tariff reduction may be suspended until the end of the period in question.

 

Tariff rate quotas (TRQs)

Measure under which a good is subject to an MFN tariff but a certain quantity (the 'quota') is admitted at a lower, sometimes zero, tariff. TRQs are mainly applied to agricultural trade and can be seasonal.

 

Technical Barrier to Trade

Trade restrictive effect arising from the application of technical regulations or standards such as testing requirements, labeling requirements, packaging requirements, marketing standards, certification requirements, origin marking requirements, health and safety regulations, and sanitary and phytosanitary regulations.

 

Value Added Tax (VAT)

VAT is imposed by VAT act 22 of 1991 at a flat rate of 15% of "duty paid value" (assessable value plus customs duty plus regulatory duty plus supplementary duty). In some cases, VAT is exempted by the NBR-VAT authority. [Reference: for the general exemption given by SRO No. 106-Law/2014/701-VAT, Table-1 (Import stage & Import and Domestic stage), dated 05-06-2014.