Pvt cos exempt from withholding VAT at source under new VAT law

YarnsandFibers News Bureau 2016-04-21 13:00:00 – Dhaka

Currently, all limited companies have to deduct VAT at source while receiving supplies and deposit the money with the exchequer as per the VAT law 1991. But the new VAT law allows only public limited companies to withdraw VAT at source from consumers.

Only public limited companies (PLCs) will have to deduct the Value Added Tax (VAT) at source from supply chain partners under the new VAT and Supplementary Duly Act, officials said.

Private limited companies will not deduct VAT at source from suppliers under the new VAT law that comes in force next July.

Barrister Jahangir, NBR member (VAT policy), disclosed the change to exporters at a pre-budget meeting Tuesday where he consulted export sector representatives on the matter.

He said that the legal measures address the difficulties companies face while paying to VAT-exempted sectors.

Senior Secretary of the Internal Resources Division (IRD) and chairman of the National Broad of Revenue (NBR) Md Nojibur Rahman chaired the meeting.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufactures and Exporters Association (BKMEA),

Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), Bangladesh Specialised Textile Mills and Power Loom Industries Association, Bangladesh Textile and Garment Waste Processors and Exporters Association, Bangladesh Textile Mills Association (BTMA) and other stakeholders from export-oriented sectors attended the pre-budget meeting at the NBR office.

Exporters demanded a cut in tax at source rates, to 0.30 percent from 0.60 percent, on export earnings and making it a final settlement. They also sought waiver of the import duty on fire-safety equipment in the budget for fiscal year 2016-17. BGMEA president Siddiqur Rahman proposed that the NBR slash their special corporate tax rate to 10 percent in the fiscal year 2016-17 from the existing 35 percent.

Abdul Matlub Ahmad, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), urged the NBR to ensure a hassle-free tax-collection system.

Mr Rahman also proposed that the source tax be reduced and the cut rate be continued at least for next three years. The BGMEA leader sought tax waiver on import of fire-safety equipment for all export-oriented sectors.

Rafez Alam Chowdhury, President of BGAPMEA, said that garment accessories sector should get the similar facilities as garments get.

Shahadat Hossain of Terri Towel and Home Textiles Association sought tax relief on cash incentives. BTMA Secretary-General Feroz Ahmed sought exemption of import duty on capital machinery and also withdrawal of 0.50 percent minimum tax on them.

Md Hatem, former vice-president of BKMEA, proposed that the NBR conduct audit after an interval of two years and withdraw mandatory system of VAT return by the exporters.

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