Export-oriented industries in Bangladesh will no longer have to pay value-added tax (VAT) on port services for raw material imports and finished goods exports, according to a new directive issued by the National Board of Revenue (NBR).
In the directive issued on Wednesday (3 January), the NBR said, “100 percent export-oriented industries, deemed exporters, or firms located in export processing zones (EPZ) will be exempted from VAT on port services in case of raw materials import (for export) and finished goods export.”
Exporters, previously burdened by the additional cost of VAT on port services, welcomed the government’s decision with relief.
Rakibul Alam Chowdhury, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), praised the NBR’s clarification and directive, saying, “We sent a letter to Chattogram Port Authority and VAT authorities to comply with it.”
The NBR, on 13 June 2019, granted a 100% VAT exemption on port services.
However, in the Finance Act of 2022, the VAT exemption benefit was withdrawn. As per a letter in July last year from Customs Excise and Vat Commissionerate, Chattogram, the CPA started deducting 15% VAT on port services from all export, imports from 27 September 2023.
According to apparel industry owners, the VAT, being levied on service charges, causes an additional cost of over Tk1,000 per TEU (twenty-foot equivalent unit) container.
Following the BGMEA’s appeal in October 2023, the NBR reviewed the matter and issued the new directive, instructing the Chattogram Port Authority and VAT office to implement the exemption for export-oriented industries.
“We haven’t been officially informed about the directive yet,” said Md Omar Faruk, secretary of the Chattogram Port Authority. “However, we will comply with it once we receive it.”
He also clarified that most export-oriented container handling takes place off-dock, where VAT is collected by independent operators.
The reinstatement of the VAT exemption is expected to provide significant relief to export-oriented industries and boost their competitiveness in international markets.
Source: The Business Standard
