Large groups face difficulty in getting central BINs

Large corporate groups are facing problems in obtaining central business identification number (BIN) for their backward linkage entities as the National Board of Revenue is issuing the central BIN only to the entities engaged in production and supply of similar or identical goods.

Field-level value-added tax officials are declining to issue the central BINs to companies having backward linkage units, particularly for printing, packaging and bottling of main products like pharmaceuticals and food items, arguing that packaging materials are not similar or identical goods of main finished goods.

VAT wing of the NBR on August 20 issued the Value-Added Tax and Supplementary Duty (Obtaining Central Registration and Tax Payment) Rules-2019, stating that a company would get the central BIN if it operated economic activities of similar or identical goods from two or more places and maintained accounts centrally.

Under the previous VAT Act-1991, a company maintaining books of accounts centrally was eligible for the central BIN, commonly known as VAT registration facility.

The NBR tagged the condition of producing or supplying similar or identical goods on the new central registration rules under the new VAT and SD Act-2012 which came into effect from July 1 this year.

A number of companies from pharmaceuticals, food processing and other sectors have raised their concerns to the revenue board after field offices declined to issue central BINs on the ground of similar or identical products, officials said.

The Bangladesh Association of the Pharmaceuticals Industries has also informed the revenue board that members of the association were not getting the BINs under the new system, they said.

Square Pharmaceuticals Ltd in several letters requested the revenue board to provide the central registration for all of its manufacturing units.

The company applied for the central registration on July 21 but is yet to get the registration.

It, however, submitted its VAT returns for July as a centrally registered business using its previous BIN.

In its letter, Square Pharma said that raw materials, packaging materials, plastic bottles, cap, active pharmaceutical ingredients, foil and other required materials were produced in separate units but finally were combined into the final goods — medicines.

‘Raw materials and packaging items are basically similar or identical goods although initially they seem different goods,’ it said.

The business activities of the company would be severely affected if the central BIN is not issued considering the units separate ones, it said.

The spirit of central registration would also be remained unachieved, it said.

Officials of the revenue board, however, said that large corporate groups must take separate BINs for their backward linkage entities as products produced at the backward linkage industries were not similar or identical to main finished goods.

As per rules, if a company engages in production of different types of products, like medicine, food products and packaging materials, it will have to obtain separate central registration for a cluster of entities although the company maintains a central account for all entities, they added.

They also said that the NBR incorporated the terminology ‘similar or identical goods’ to check VAT evasion by a company through transferring goods from one unit to another.

Source: New Age.