The Chittagong Port Authority (CPA) has started realising 15 per cent VAT on tariffs of all 60 types of services it provides to port-users, with consent from the shipping ministry, officials said.
In the past, the VAT (value-added tax) had been levied on tariffs for 25 types of port-related services.
The new VAT incidence took effect on December 27, the day the NBR (national board of revenue) sent a letter to the CPA explaining the definition of 'port-related services'.
"Yes, we got ministry's clearance last week. And we have started realising VAT on tariffs for all port services," CPA secretary Omar Faruk told the FE.
Earlier, having received the letter from the NBR for realising VAT on tariffs for all port services, the CPA sought shipping ministry's opinion before implementing the request.
A senior shipping ministry official told the FE they had discussion with the NBR officials on this issue since businesses expressed strong reservations over payment of VAT for all port-related services.
"But the NBR officials were adamant on their decision. So, we asked the CPA to go by NBR's statutory regulatory order (SRO)," he said.
With the new explanation from the NBR the services like un-berthing charge, mooring occupancy, port dues, pilotage fee, jetty crane charges, quay gantry-crane charges for container handling, night navigation fees, tug charges, shifting fees, charges for using floating crane, salvage and diving charges, dredger hire, fire-service charges, and hire of slipway now come under the purview of VAT.
The NBR in its explanation said VAT will be applicable on these services, too, as those were not given waiver under section 14 of the VAT Act 1991.
When contacted, president of Chittagong Chamber of Commerce and Industry (CCCI) Mahbubul Alam told the FE the new VAT will raise cost of doing business and the end-users (consumers) will be affected.
"I pay tax, VAT on raw-material imports. Why should we pay VAT again to avail those services," he asked.
Mr Alam, also chairman of the Port Users' Forum, said the CPA is yet to discuss the VAT-expansion measure with the users.
"No port-user informed me about the latest development. I have to check it with CPA officials," he noted.
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Siddiqur Rahman earlier had told the FE cost of production had already gone up significantly in the recent days. "We don't expect further burden on us," he said.