NBR waives VAT on travel agents' commission

The revenue board has exempted the travel agents from paying Value Added Tax (VAT) on their commission earnings from sales of air tickets, according to an order.

There was 15 per cent VAT, imposed in Fiscal Year (FY) 2016-17, on travel agents' commission that they receive from airline operators for selling air tickets.

In a Statutory Regulatory Order (SRO), issued on Wednesday last, the VAT wing of the National Board of Revenue (NBR) waived the tax.

Officials said the VAT has been exempted following demands from the Association of Travel Agents of Bangladesh (ATAB).

The association leaders said collection procedure of VAT from air tickets is a complex one and not in practice anywhere in the world.

They proposed the NBR to create a separate accounting code if the VAT wing wants to collect the tax from airline passengers.

Officials said the ATAB's proposal for VAT exemption was ruled out by the NBR several times in the last two years.

Also, the Finance Minister initially agreed on the proposal of ATAB for shifting the liability of VAT on commission earnings to passengers by adding the amount of VAT to ticket price.

Later, he decided to waive the VAT to avoid any additional financial burden on air passengers.

NBR also found it illogical to shift the liability of VAT to passengers.

Mahmud H Khan, Managing Director, Flight Center Limited, said there is no such VAT on airline passengers world-wide, not even in neighbouring country India.

"We have sought the VAT waiver to make travelling affordable for the passengers," he said.

He hailed the government's decision of VAT exemption for the services responding to the long-standing demand of the travel agents.

Meanwhile, in a separate SRO, NBR has waived 10 per cent supplementary duty (SD) on production of baby lotion.

In the proposed budget for current FY, the NBR had imposed the SD on production of baby lotion and petroleum jelly.

Later in the Finance Act-2018, the NBR waived the SD on petroleum jelly but kept the SD on baby lotion unchanged.

Officials said they have found the local manufacturers', including Square Toiletries Ltd., demands logical regarding withdrawal of the SD.

The industry insiders said local consumers will start using foreign brands lotion if they found domestic ones costlier.

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