CHATTOGRAM: The ship-breaking industry which supplies raw materials for the country's steel and iron sector is suffering a huge loss in the current financial year because of twin problems, imposition of advance tax (AT) on import of scrap ships and COVID-19 pandemic.
The leaders of the Bangladesh Ship Breakers and Recyclers Association (BSBRA) have urged the government to withdraw five per cent AT or VATable tax (which is refundable) on import of scrap ships from the next budget and also giving incentive for scrap ship importers from its stimulus package.
Talking to the FE a top BSBRA leader said they have already sent a letter to the National Board of Revenue (NBR) and the concerned ministry requesting them to withdraw the AT on scrap ships import.
He said scrap ship imports sharply declined in the last 11 months of fiscal year 2019-20 (FY20) due to imposition of the AT by the NBR in the current national budget. Besides, he said, the business has hit snag in the last two-and-a-half months due to the coronavirus-induced nationwide general holidays.
In the FY20, ship-breaking business has almost remained standstill due to the AT, he said.
The association leaders alleged that the tax authority has not yet returned to them the money paid to the government as AT for import of scrap ships during the outgoing financial year. The tax law stipulates that business people will be able to adjust the AT with their payable VAT by filing the monthly VAT
returns, they mentioned. The law further stipulates that traders who don't have business identification number (BIN) will be able to get cash refund by making an application to the respective VAT commissioner who will settle the application within 15 days and issue cheque making a refund to the trader.
The BSBRA leaders said the importers are yet to get back a total of Tk 2.38 billion (Tk 238 crore) paid as AT during the outgoing financial year.
According to the customs authorities, the ship-breakers imported a total of 250 scrap ships in 2015-16 fiscal year and paid Tk 8.22 billion (Tk 822 crore) tax to the government. A total of 188 scrap ships were imported in 2016-17 fiscal year and tax worth Tk 6.32 billion was paid, 202 scrap ships were imported in FY18 paying Tk 5.96 billion (Tk 596 crore) tax and 272 scrap ships imported in FY19 with Tk 7.92 billion (Tk 792 crore) paid as tax while only 138 ships imported in the last 11 months of FY20 and Tk 4.78 billion (Tk 478 crore) tax paid to the NBR.
It may be mentioned that tax payment collection against import of scrap ships decreased by Tk 3.14 billion (Tk 314 crore) in the last 11 months of the outgoing fiscal year compared to that in the corresponding period of the last financial year.
Besides the AT and Covid-19, the traders also partly blamed bureaucratic tangle or dilly-dallying by the authorities in non-payment of the refundable money to the current crisis in ship-breaking industry.
Not only the traders, the government is also losing a huge amount of tax as the import of scrap ships is decreasing day by day, they said. Apart from that, a large number of workers have become jobless for the same reason, they mentioned.
Mohammed Jahirul Islam, a member of BSBRA executive committee, said the government has lost more tax in FY20 than the previous fiscal year because of sharp fall in import of scrap ships due to imposition of the AT.
Najmul Islam, Secretary of BSBRA said, "We have already sent a letter to the NBR and the ministry requesting to withdraw the AT in the coming budget. We hope that the government will consider our appeal and withdraw the new tax," he added.
Sources said, after the country's independence, ship-breaking industry started its journey in 1971 in Sitakunda. Around 40,000 workers engaged in the industry in Chattogram. On an average, over three million (30 lakh) metric tonnes (MT) of scrap ships were imported annually by Bangladesh before the imposition of the AT in 2019 and coronavirus outbreak, which was more than 25 per cent of total scrap ships of the world.
The total turnover of the ship-breaking industry is around Tk 50 billion (Tk 5,000 crore) per year. A total of four types of old vessels are scrapped on shipyards of Sitakunda. The vessels are: Turbine Tanker (TT), Motor Vessel (MV), Steam Vessel (SV) and Fishing Trawler (FT). Of them scrapping of Turbine Tanker is very dangerous for environment and also health of workers.
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