Businesses took a stand against blanket VAT imposition on all 60 types of port services when the main seaport's operators paused before realising the tax to get a direction from their parent ministry.
Sources said the Chittagong Port Authority (CPA) decided to wait until getting the nod from the shipping ministry about executing National Board of Revenue (NBR) decision to expand VAT (value-added tax) across the board.
The NBR late last month in an explanation to a port query made it clear that 15 per cent VAT will be applicable to all types of services which the port provides to the users. Presently, the VAT is being realised on 25 types of services.
"Our board has decided to take vetting from the ministry before implementing NBR's VAT-expansion move," CPA chairman M Khaled Iqbal told the FE.
"Let's see what the government high-ups say on new VAT on all port services," he said.
Officials said the main port's board members Monday took the decision to seek opinion of its parent ministry on this issue and send a letter by Wednesday in this regard.
They made a point that expansion of VAT on port services will raise cost of doing business and so businessmen would not agree to pay the new toll. The ministry of shipping may argue with the NBR over the issue.
Services like un-berthing charge, mooring occupancy, port dues, pilotage fee, jetty-crane charges, quay gantry-crane charges for container handling, night-navigation fees, tug charges, shifting fees, charges for using floating crane, salvage and diving charges, dredger hire, fire-service charges, and hire of slipway were out of the purview of the tax net.
However, the NBR putting forward a new explanation said VAT will be applicable to these services, too, as those were not given waiver under section 14 of the VAT Act 1991.
As the news of VAT expansion on port services spread, businesses responded with their worry that the new VAT will deepen their agony further. They said they are very much unhappy with the quality of services they get at Chittagong port where congestion is a major problem along with inadequacy of necessary equipment.
President of Chittagong Chamber of Commerce and Industry (CCCI) Mahbubul Alam told the FE Tuesday the new VAT would raise the cost of doing business at a time when the government is trying to reduce it. "Ultimately, the end-users of goods, the consumers, will be affected," he said.
Mr Alam said they are paying port dues on exports. "An additional VAT on it will raise the cost." He said the port authority is yet to officially inform businesses about the VAT-expansion measure. "We will talk to high-ups after being informed formally."
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Siddiqur Rahman told the FE the cost of production had already gone up significantly in the recent days. "We don't expect further burden on us."
The chief of the trade body in the country's main export industry takes a stand: "The businesses won't pay the VAT."
syful-islam@outlook.com