Exporters may face problems getting refund of customs duty paid during import of raw materials for manufacturing export goods after implementation of the new value-added tax law as the law has scrapped the existing office that conducts the function.
The new VAT and Supplementary Duty Act-2012 is scheduled to be implemented from July 1, 2017 and the Duty Exemption and Drawback Office which gives the refund of VAT and customs duty to exporters is set to be abolished from the day.
In the new VAT law, there is a provision of refund of only VAT through VAT commissionerates but the law says nothing about refund of import or customs duty.
Officials and exporters said that the provision of scrapping the DEDO created confusion over the process of refund of customs duty, known as duty drawback, in future.
According to the existing VAT and customs laws, exporters get refund of the VAT and customs duty paid during import of raw materials for producing goods for export.
The DEDO office now housed in a building at Topkhana in Dhaka usually gives refund against export of knitwear, special textile, jute goods, leather, plastic goods, surgical goods, electricity, fuel, gas, wood, shopping bag and some other products which don’t enjoy bonded warehouse facility for import of raw materials.
NBR officials said that the new law abolished the post of director general of DEDO established in 1987 and empowered VAT commissionerates to refund VAT.
According to the law, exporters will have to claim refund of VAT with submitting monthly VAT returns to the VAT commissioner concerned.
The DEDO, however, will temporarily exist until June 30, 2018 for settling the refund issues of previous years and the NBR will have to issue a special order for this, they said.
The DEDO gave refund worth Tk 96.72 crore including Tk 75.55 crore in VAT and Tk 21.17 crore in import duty in the fiscal year of 2015-2016.
The DEDO on March 16 held a meeting with stakeholders including Bangladesh Knitwear Manufacturers and Exporters Association, Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Jute Mills Association on the issue.
Stakeholders at the meeting were in favour of getting refund of VAT and customs duty from a dedicated single office like DEDO rather than visiting different VAT commissionerates.
Commissionerates usually don’t want to give refund as they work as VAT collection office and have to achieve revenue collection target.
After the meeting, DEDO director general Wahida Rahman Chowdhury sent a proposal to the NBR to create a post of commissioner of export refund in the new law to resolve the complexities.
Officials of the DEDO said that the revenue board could transform the DEDO office into export refund office to address the problem.
Bangladesh Jute Spinners Association vice-president Abul Hossain told New Age on Saturday that they preferred continuation of the existing system of duty drawback through DEDO.
‘Abolition of DEDO has created confusion among us and we have no clear idea about the refund process in the coming days with implementation of the new law,’ he said.
Source: New Age