Karnafuly Ship Builders gets VAT waiver

The National Board of Revenue (NBR) has exempted Karnafuly Ship Builders Limited from paying VAT on the supply of dredgers to the Bangladesh Inland Water Transport Authority (BIWTA).

The revenue board has granted the exemption recently as the BIWTA failed to make payment in dollars for four dredgers bought from the shipbuilder.

To this end, the revenue board issued a special order on March 14.

The authority had procured four suction dredgers, relevant spare parts and equipment from Karnafuly Ship Builders Limited through an international tender, the order reads.

The revenue board exempted the shipbuilder from paying VAT on the condition that VAT is exempted only for those purchases when Karnafuly Ship Builders received payment in dollars, and it would not have to pay VAT as deemed export.

“But if the BIWTA makes the payment in taka, the shipbuilder has to pay VAT and the company has to take no-objection certificate from Bangladesh Bank in local currency payment instead of foreign currency payment,” the order added. It included that the procurements made through international tenders are deemed exports for Karnafuly Ship Builders. That is why VAT is not applicable, but the payment should be made in foreign currency.

The company requested the NBR to consider the payment in taka as deemed export amidst the ongoing economic headwinds if the BIWTA was unable to pay in dollars.

Replying to the matter, the NBR said, “If the payment is not made in foreign currency, it cannot be considered as deemed export.”