NBR to remove VAT exemption certificate requirement for port services

The export-oriented industries will not be required to have the VAT exemption certificates for receiving services from the ports, freight-forwarders, clearing and forwarding agents, inland container depots, and shipping lines as per a recent decision of the National Board of Revenue (NBR).

The NBR on Thursday decided to issue a circular in this regard, according to its officials.

Sources said the NBR has taken the step after a meeting with all stakeholders, presided over by VAT policy member Masud Sadiq, at its headquarters on 17 October.

Exporters have welcomed the move, saying it will make it easier for the export-oriented industries to do business.

During the meeting, sector leaders urged the NBR to withdraw VAT exemption certification as 100% of the export-oriented industries enjoyed VAT waiver facilities on those services.

The industry owners said the government wants to make it easier to do business but the obligation to get VAT exemption certificates makes it complex for the export-oriented industries during the Covid-19 pandemic.

The private inland container depots issued notices, saying exporters have to pay VAT for their services or submit VAT exemption certificates.

Sources said after the NBR's recent decision, the exporters will get VAT exemption on those services against their association membership certificate, and VAT and Bangladesh Investment Development Authority registrations only.

The NBR officials said the export-oriented industries always enjoyed VAT exemptions for those services. Then, the 2019 amendment of the VAT law introduced obligations for a VAT exemption certificate to make the industries more compliant. Now again the NBR has decided to remove this condition after getting feedback from the business community.

But the export-oriented industries should be audited every year to prevent the misuse of this facility, said people involved in this sector.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, expressed hope that the NBR's move will make it easier for them to do business.

He also said, "The exporters still have to collect certificates from the VAT commissionerate to get VAT exemption on gas and electricity bills. The requirement of submitting that certificate should be withdrawn, as those connections were given to 100% export-oriented industries only."

Voicing a similar demand, Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association, said the NBR should remove the condition of VAT exemption certification on gas and electricity bills, which will reduce the sufferings of exporters.