BIAA President Md. Nuruzzaman attended a pre-budget discussion Meeting with the Chairman of National Board of Revenue (NBR) on February 13, 2024 at Rajosho Bhaban, Sher-e-Bangla Nagar, Agargaon, Dhaka. In the meeting, the President of BIAA Md. Nuruzzaman placed his recommendations regarding Indenting Service Export.
He highlighted the following points for facilitating Indenting Service Export Sector:
• The indentors were licensed as Service Exporters by the Office of Chief Controller of Imports & Exports (CCI&E) in 2018.
• As per Clause 24 of the VAT Act 2012, VAT should be applicable @0% on Services exported outside of the country.
• In light of the said Act, deduction of VAT @5% on indenting service export earnings is contradictory to the VAT Act-2012.
• Additionally, Bangladesh Trade & Tariff Commission has also recommended withdrawing of VAT @5% from indenting service export earnings as per their research and detailed analysis on Indenting Services.
• Besides, the then hon’ble Commerce Minister and hon’ble Planning Minister also recommended for withdrawal of VAT as per Acts and Laws in force and issued demi official letters to the Ministry of Finance for withdrawal of VAT from Indenting Services.
• On February 17, 2020, a letter was issued from the Export Wing-1 of Ministry of Commerce to the Chairman of the National Board of Revenue (NBR) for imposition of VAT @0% to this Indenting Service Export.
• FBCCI the Apex Trade Body of Bangladesh in their pre and post budget recommendations also recommended for withdrawal of VAT from Indenting Service Export sector.
• He mentioned that, according to the export statistics of Bangladesh Bank, indentors have been repatriated US$115.1 million during fiscal year 2022-2023. Earnings from indenting services exports will increase significantly if the @5% VAT is withdrawn from the sector.
• Due to the imposition of VAT on Indenting Service Export, most of the businessmen are importing goods through Direct Proforma Invoice (DPI) where there is no accountability. By ensuring accountability in this trade, the revenue earnings of the government will rise radically. If the VAT Act 2012 is applied on the indenting service export sector, the amount of tax evasion on importing through DPI will be reduced to a great extent. As a result indenting business will
flourish as an ethical business that will further contribute to the country’s economic
development as well as employment creation.
Afterwards, in light of the above issues, he handed over the supporting documents to the Chairman of NBR for imposition of VAT@0% to the indenting services. He further added that, if VAT @5% continues on Indenting Service Export, export earnings from this sector will be decreased and create negative impact upon the foreign currency earnings for the nation.