The National Board of Revenue (NBR) has decided to issue VAT refund for export-oriented sectors and international organisations from its drawback office, instead of VAT field-offices, in a bid to simplify the refund system.
The Duty Exemption and Drawback Office (DEDO) will dispose of the refund applications of the exporters, international organisations, diplomatic offices and embassies.
At a recent meeting, the NBR took the decision to bring necessary amendments to the law to implement such decision.
NBR chairman Md Mosharraf Hossain Bhuiyan chaired the meeting, held with the field-level VAT commissioners to resolve the complexities on VAT refund as per the new VAT and Supplementary Duty Act-2012.
At the meeting, the NBR has taken four major decisions of VAT refund process.
NBR officials have found that complexities in refund process caused a negative growth of revenue collection.
They have also found a possibility of increase in the prices of products if traders do not get the VAT refund on time.
In the new VAT law, whose implementation began on July 1, 2019, the NBR imposed Advance Tax (AT) on all types of import goods, excepting a few ones.
However, the paid AT at import stage is refundable that the field-level VAT offices will issue to the importers.
In the new VAT law, the NBR has scrapped the VAT refund issuing authority of DEDO and empowered the field-level VAT offices to refund the paid VAT. The DEDO is empowered to issue only refund of customs duty.
Officials said the NBR will have to bring amendment to the VAT law to empower the DEDO again for refunding VAT paid by diplomatic offices and exporters.
After the law amendment, the international organisations and exporters will be able to get refund of their paid VAT from the DEDO instead of moving from one VAT zone to another.
Mention may much that, both exporters and diplomatic organisations get VAT exemption.
They get refund of the VAT that is paid at the time of purchasing fuel oil for vehicles, furniture and other VAT inclusive products.
At the meeting, the NBR also decided to conduct an exercise for defining the 'inputs' in the new VAT law to check businesses from obtaining higher rebates.
VAT officials have found that some manufacturing companies are claiming unusual things as their inputs of production taking advantage of the absence of the definition in the new VAT law.
The VAT policy wing will explore the possibility to bring some legal amendments through intensive discussion with the field-level VAT commissioners in this regard, officials said.
In the first two months of the current FY, the VAT collection by Large Taxpayers Unit (LTU) posted a negative growth due to giving higher refund to the businesses on their inputs along with some other factors.
At the meeting, the NBR also instructed its commissioners to resolve both the refund applications as per the new VAT law (2012) and previous VAT law (1991).
To expedite the disposal of refund applications, the commissioners will open two separate accounts for VAT and SD in the name of their respective commissionrates.
Later, they will collect cheque books from relevant accounts offices.
The NBR will issue a comprehensive guideline in this regard.
At the meeting, the NBR chairman instructed the field-level VAT officials to resolve the bottlenecks in implementation of the new VAT law without harassing the businesses.
He said delay in refunding AT may cause escalation of prices of products.
Some VAT exempted organisations have faced unusual delay in getting refund of their paid AT at import-stage.
They had to count bank interest rates on the amount paid as AT.
Besides, VAT officials strongly demanded restoration of the previous at source VAT deduction and depository process some of the revenue sensitive services such as consultancy firm, supervisory firm, audit and accounts firm, legal advisers, transport rent services, architect, interior designers, engineering firm and leasing companies.
They said it is utmost necessary to restore the process of depositary of the deducted VAT directly through treasury chalan and furnish the information in the VAT returns for the sake of protecting revenue from those services.
