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VAT-exempt utilities for export sectors

NBR guideline says application by 15th of each month to enjoy the facility


Doulot Akter Mala | Published: September 27, 2019 10:07:48 | Updated: October 19, 2019 11:01:46


The export-oriented sectors will get full exemption from payment of value-added tax (VAT) on utility services like gas, water and electricity bills only for the units manufacturing exportables.

The facility will not be valid for other purposes like offices and administrative buildings of exporters, said a guideline of the revenue board on Thursday.

It will be valid for the wholly export-oriented sectors, deemed exporters and industries located inside the export processing zones (EPZs).

The National Board of Revenue (NBR) issued the guideline on the offer for exporters.

It was a long-cherished demand of the exporters to exempt them from payment of VAT on utility bills.

Earlier, the rate of VAT exemption was 80 per cent natural gas and electricity, 60 per cent for water and 100 per cent for other services.

From the current fiscal year, 100 per cent export-oriented sectors will get full waiver of VAT payment under the new VAT law, effective from July 01.

VAT officials said the measure was incorporated in the 2019-20 fiscal budget, but exporters faced the problem of availing it in the absence of a guideline.

The guideline has been issued after sensing the possibility of misusing the facility by a section of exporters, they added.

To avail it, an exporter needs to apply to the relevant VAT zone with the number of the utility meter used only at his or her export goods-manufacturing plant.

The guideline stipulates that exporters must submit their applications by the 15th of a month to enjoy VAT exemption on the bill of that particular month.

The relevant VAT commissioner will inspect and scrutinise names, addresses, VAT registration numbers and VAT returns before issuing the exemption order.

The commissioner will inform the exporters of their being offered the full VAT waiver.

However, the names of the particular month, for which the VAT exemption will be offered, have to be mentioned in the order.

Some utility service providers issue bills in favour of the EPZ authorities instead of export-oriented industries.

In that case, EPZs will give certification by furnishing details on the use of utilities and the amount of bills separately for all industries.

The commissioner concerned will allow the company to avail VAT exemption if he only finds the export-performance of the company satisfactory.

However, the EPZ authorities will not be entitled to VAT exemption from their own utility service bills.

Exporters will not get VAT exemption against a shared meter used by export-oriented and domestic market-oriented factories.

The facility will not be valid for exporters if they use one electricity meter for different industries and all of that are not manufacturers of export products.

To avail VAT waiver on port, freight forwarding, clearing and forwarding, insurance companies, shipping agents, the commissioner concerned will have to cross-check on some major issues.

He will scrutinise VAT registration, VAT returns, certification of Bangladesh Investment Development Authority, Bangladesh Export Processing Zones Authority and membership of relevant exporters' association before allowing VAT exemption for exporters.

The VAT-exempt industries must furnish details like proceeds realisation certificate (PRC) as evidence of repatriation of foreign currency in VAT returns.

The papers will have to be submitted by the 15th of every month to the VAT zone concerned.

NBR has given two prescribed formats in the guideline for furnishing unit-wise details about VAT exemption, including the amount of the payable VAT.

The divisional VAT officer will be able to recommend to the commissioner concerned to scrap the facility in case of the detection of any inconsistencies like in PRC.

The commissioner is authorised to cancel VAT exemption after holding a hearing of the company.

doulot_akter@yahoo.com

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