The National Board of Revenue (NBR) has issued the central VAT registration rules to help businesses obtain single registration for production of 'identical and similar' goods and services.
The 'Value Added Tax (VAT) and Supplementary Duty (obtaining Central Registration and tax payment) Rules-2019' now allow for central registration of businesses that maintain accounts and pay taxes centrally.
The rules, issued by second secretary of VAT policy wing Tariq Hassan, took effect from Tuesday.
Any businessman or service provider will also be able to obtain central registration if they sell products from their own sales units.
However, businesses will have to pay VAT at a rate of 15 per cent for obtaining central registration.
The producers of identical and similar products and service providers who are enjoying reduced VAT rate or specific tax will not be entitled to the central registration facility.
The policy has been issued in line with the new VAT and SD Law-2012, implemented from July 01, 2019, with the intent to simplify the process of central registration.
In the VAT Law-1999, the businesses were required to obtain unit registration of each of the business units and central registration was optional for them on a limited scale.
In the new law, central registration process has incorporated the term 'identical and similar products' if those are supplied from two or more than two places.
However, experts said there is some confusion regarding obtaining central registration by mentioning 'identical and similar' products.
The Institute of Chartered Accountants of Bangladesh member Snehasish Barua said the incorporation of 'identical or similar' products and services has created confusion for central registration.
The term was not there in the 1991 law and businesses were allowed to obtain central VAT registration without following complex procedure, he added.
Also, there is no definition of 'identical' or 'similar' types of services in this statutory regulatory order, Mr Barua argued.
He suggested NBR waive the words 'identical' or 'similar' products and services to allow a company to obtain central VAT registration in a simplified way.
The chartered accountant also sought to allow a manufacturer or trader for central registration even if they commercially import goods.
"The government's vision to ease the process of doing business could be materialised if policy-makers consult businesses and professionals before issuance of such circulars," he said.
A senior VAT member, however, said the new term has been incorporated to check misuse of the central registration facility.
He said NBR would sit with businesses if any confusion arises regarding the central registration process.
As per rules, a businessman will have to apply to the divisional officer with the address and other information of all of the units to obtain central registration.
The divisional VAT officer will issue a VAT registration certificate after scrutinising the information furnished in the application.
If case of partial information or improper applications, the officer will inform the applicants of the anomaly within three days.
All of the record keeping of financial transactions, book of accounts, tax payment will have to be operated and maintained centrally.
Businesses will have to declare input-output coefficient to the divisional officer before supplying products from the central unit.
For service providers, tax will have to be paid from the central unit for all of the branches and units and it should be shown on the VAT returns.
The businesses will have to mention names of the central unit, address and central VAT registration number for purchasing products, import-export and supplying products and services.
They will have to keep accounts information and preserve the VAT invoice in both all of the sales units and central unit at least for five years.
Divisional commissioners will audit the centrally registered businesses on a mandatory basis every year.
However, they are empowered to conduct audit for more than one year. All sales units under the central unit will also be audited in a year.
The VAT wing has given two prescribed format for businesses.
One is for furnishing data for transferring products and services to sales units from the central unit and another for supplying products from central and sales units and tax payment.
NBR issued another circular on Tuesday warning its officials not to compel the businesses to visit offices to obtain business identification number (BIN).
The circular has been issued following complaints of the businesses in this regard.
In a bid to ease process of VAT registration or BIN issuance, NBR asked its officials to issue BIN within three working days online.
It warned the officials of stern punitive action in case of any irregularities in issuing VAT registration.
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