The Large Taxpayers Unit for value-added tax of the National Board of Revenue has sought directives from the board on implementation of a budgetary measure through issuing a demand notice to British American Tobacco Bangladesh for realising supplementary duty and value-added tax worth Tk 1,618 crore.
The LTU could not take any step to implement the key budgetary measure on tobacco taxation even after 10 months of the announcement of national budget for the current 2017-2018 fiscal in absence of any instruction from the NBR and also due to legal complexities on the issue.
The government in the budget set the price of low quality international-brand cigarettes at Tk 35 per 10 sticks produced and sold by multinational companies for imposing duty and other taxes while it set the price of same quality cigarettes produced and sold by local companies at Tk 27 to protect local manufacturers.
The BATB has been paying the SD and VAT on Tk 27 like local companies and denying paying the tax on the additional portion of the price (Tk 8) questioning the legality of the measure.
In this situation, the LTU commissioner Md Matiur Rahman on March 27 wrote a letter to the NBR seeking advice on next steps on the issue.
The arrears SD and VAT amounts from the company stood at Tk 1,618 crore for the period between June 2017 and February 2018.
The budgetary measure on tobacco taxation comes into effect from June 1, immediately after the announcement of the budget.
A VAT office move on issuing a demand notice for realisation of the arrears also went in vain as the finance minister asked the NBR not to take any step on the issue, the LTU said in the letter.
‘It is urgent to immediately issue demand notice to realise the amount,’ LTU commissioner Md Matiur Rahman said in the letter.
Earlier, the LTU wrote three letters to the NBR member for VAT policy seeking instructions on the issue.
He said that VAT officials from the LTU had several times requested the tobacco company to pay taxes and duties in line with the budgetary measure and NBR general order and special order in this regard.
VAT officials also visited the BATB premises several times and found that the company was selling cigarettes at Tk 27 per pack instead of Tk 35, he said.
Following a letter of the LTU, the VAT law and rules wing of the NBR on November 1 instructed it to take legal steps on the issue as per law for ensuring protection of the government’s revenue and proper implementation of the fiscal policy, according to the letter.
The NBR also asked the field office to inform it about the measures taken, it said.
‘Once the LTU took the initiative to issue a demand notice as per the instruction, an official of the VAT policy wing informed me on telephone that the finance minister asked not to take any step on the issue,’ Matiur said.
So, the LTU could not implement the plan of issuing demand notice, he said.
In this situation, the LTU is again seeking directives on next steps, he added.
NBR officials said that the BATB was arguing that the revenue board cannot discriminate in taxation between foreign investors and local investors as the Foreign Investment Protection Act 1980 prohibits such discrimination.
It also cannot impose, as per law, tax through special order and tax can be imposed only through statutory regulatory order which requires vetting of the law ministry, they said.
Finance minister AMA Muhith in his final budget speech also said that the problem would be settled through issuing an SRO.
But, there was no progress on the issue, said an NBR official.
Source: New Age.