Port services become costlier as NBR wakes up to an SRO late

Port usage is poised to become costlier with the NBR asking the Chittagong Port Authority (CPA) to realise 15 per cent value-added tax (VAT) on all services: storage of products, scanning and other related activities.

Officials said the National Board of Revenue (NBR) made a decision in a recent meeting to clear the confusion that has been prevailing among the CPA officials over applicability of VAT to the port-related services.

Following the decision, the CPA recently made a move to realise VAT at the rate of 15 per cent on port services related to clearing exports and imports.

Exporters and importers from now on will have to bear higher costs on account of port-service usages.

A senior official of the CPA said the Authority was in a quandary over applicability of VAT in the case of 35 port-service charges.

"Currently, the CPA is paying 15 per cent VAT on 25 types of services. We have prepared documents relating to the recovery of VAT as per NBR's recent decision," he said.

For the time being, the CPA has held back from preparing the bills of service charges as it will be liable to deposit the increased amount of VAT to the public exchequer, he said.

Earlier, the CPA had sought NBR directives regarding VAT on charges, fees and other service fees.

After scrutinizing the Statutory Regulatory Order (SRO), the VAT wing found those port-related services to be taxed.

The NBR, in a recent letter, informed the CPA secretary about the necessity of ensuring deposit of 15 per cent VAT on port-related services with the public exchequer as per VAT law.

Any of the services against fees or charges is subject to payment of VAT, the letter noted.

The NBR also informed all of its VAT offices across the country about the latest decision on realisation of VAT on port-related services.

CPA officials said they sat for a number of meetings regarding the blanket imposition of VAT on port services that may push up the port charges on export-import operations.

CPA is a service-oriented entity. It deals with major part of export-import activities of the country through the prime seaport.

As per NBR decision, the CPA and all other port authorities have to pay VAT against its services that they would provide either directly or indirectly.

In an SRO, issued on June 3, 2013, the NBR defined 'port services' as services provided in open or other places where export and import activates are carried on in exchange for charges, storage of goods, direct or indirect facilities for storage of goods, security scanning and related activities in inland-container depot and container-freight stations.

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