Fiscal remedy for lowering lifesaving drug prices

NBR merges dual VAT down

Revenue board amends taxing modalities to commoners' relief

FE REPORT | Thursday, 19 May 2022

Government's revenue authority has recast the VAT-fixation and-payment modalities on medicines to merge dual taxation down, in a fiscal remedy meant for making lifesaving drugs cheaper.

Prices of medicines have registered rise on many occasions, generating criticism of the drug-makers from different corners, including public-health campaigners and sufferers.

Sources say the National Board of Revenue has amended the value-added tax (VAT) method following request of the pharmaceutical companies as they have to pay the tax at two stages to adds up to medicine prices.

The pharmaceutical companies have to pay higher VAT than payable amount under the VAT law due to "faulty calculation method in the VAT law" since 2019, officials said.

The VAT wing issued an order Tuesday with the amendments which would also "help keep drug prices low at consumer level", they added.

Due to the alleged anomalies in VAT laws, the pharmaceutical companies were complaining of decline in their trade returns after VAT calculations.

As per the VAT and Supplementary Duty Act 2012, pharmaceuticals are subject to paying 17.4 per cent VAT in total, inclusive of that at production and trading stages.

The highest rate of VAT in Bangladesh is currently 15 per cent although many sectors are paying beyond that.

Pharmaceutical industry-insiders say they are not willing to negotiate or pursue on this issue as it is mutually settled.

In the latest order, the VAT wing has clarified that deduction of VAT at source would not be applicable at the time of supply of medicine to any company from depot or warehouse as pharmaceutical companies pay entire VAT at production and business stages.

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