NBR rejects AIT exemption plea on IOCs' machinery import

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Doulot Akter Mala
The National Board of Revenue (NBR) has rejected a plea from Petrobangla for scraping the provision of payment of advance income tax (AIT) on import of capital machinery by IOCs for gas field exploration, development and supply.
The board has found that the international oil companies (IOCs) have been importing machinery over the past ten years for which the advance income tax was not paid by Petrobangla.
The existing income tax ordinance, 1984 has the provision to collect advance income tax on import of capital machinery.
The board recently requested the Petrobangla to pay advance income tax from next fiscal on behalf of the foreign companies as per Production Sharing Contract (PSC).
According to the PSC, signed with the IOCs, the Petrobangla shoulders payment of all types of tax levied on the foreign companies.
The board has made payment of advance income tax mandatory at around 4.0 per cent at a recent meeting with Petrobangla and all leading IOCs including Chevron, Cairn, Tallow Bangladesh and officials of finance division.
The NBR has assured the foreign companies to provide all kinds of support for exploration and development of gas fields.
Officials said the NBR has issued the income tax exemption certificates to the foreign companies following requests of the IOCs.
Revenue officials said over the past ten years the issue of payment of advance tax escaped their notice as the government waived all other levies such as import duty and Value Added Tax (VAT) on imported machinery of IOCs.
"There is no customs duty and VAT on import of capital machinery by IOCs, but the provision for advance payment of income tax remained unchanged," said a top income tax official.
Petrobangla paid Tk 222 million in 2008-09 and Tk 1.8 billion in 2009-10 on behalf of US-based Company Chevron as income tax.
From the next fiscal, the NBR will collect the advance tax at 4.0 per cent on import of capital machinery by the IOCs.