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Wednesday, June 26, 2024

Withdrawal of VAT at Chittagong port pleases garment exporters

The Chittagong Port Authority in Bangladesh has accepted the demand of exporters by revoking the value-added tax (VAT) on port services for export-oriented industries.

Exports the world over are generally exempted from all taxes but the Bangladesh The National Board of Revenue (NBR) in 2019 and 2021 through two separate statutory regulatory orders (SROs) slapped a 15 per cent VAT on port services even for fully export-oriented industries and factories increasing their cost. The exporters have since then been strongly protesting this step.

The RMG exporters have hailed the decision and termed it as positive development for the garment industry of the country. They said the decision to withdraw VAT on port services is expected to “reduce operational costs” for businesses in Bangladesh, especially amid the challenges posed by the current global economic conditions.

The Chittagong Port Authority began imposing this VAT as a result of the Finance Act enacted last year, terminating the “zero rate of VAT” on services related to international transport and loading/unloading supplies from ships starting 1st July 2022, significantly impacting garment exporters.

The exporters exerted relentless pressure for the withdrawal of this tax. The textile representatives held a series of negotiations with the NBR and finally succeeded in convincing it to withdraw the two SROs.

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