The National Board of Revenue (NBR) is likely to take stern action against Sadharan Bima Corporation (SBC) if it fails to pay its outstanding VAT (Value Added Tax) to the tax authority within a month, officials said.
The tax authority may freeze the bank account of SBC if it doesn't pay its outstanding VAT to the NBR shortly, they added.
Presently, SBC owes over Tk 138 million to NBR as VAT on aviation insurance premium for the fiscal year (FY) 2012-13. But the insurance company has yet to pay outstanding VAT to the NBR, they also said.
"We sat in a meeting last week with the officials of SBC and state-owned airline on outstanding VAT. The government entities, SBC and state-owned airline will take necessary steps to make payment of unpaid VAT to the NBR through discussion with their higher authorities," a senior official told the FE.
The state-owned insurance company will have to inform the Large Taxpayer Unit (LTU) under the NBR about the progress report within maximum 30 days since the meeting date, he added.
"The insurance company should pay outstanding VAT as per the existing VAT law and regulations. We failed to pay VAT to the NBR due to non-payment of premium by Biman Bangladesh Airlines (BBA)," an official of the insurance company told the FE on Sunday.
He added: "In the meeting we have requested the NBR not to freeze our account in future if we fail to make payments soon."
In the meeting the BBA made its position clear that "as per clause-3 of VAT law, second schedule 5c (where the list of VAT exempted services shown), Bangladesh Biman is treated as 'Transport Service Provider and accordingly Biman Bangladesh Airlines a VAT-exempted organisation."
"We didn't claim VAT from BBA. We have demanded VAT from SBC only on aviation premium. It has been mentioned in the SRO No-168-AIN/2013/672 VAT, dated 06/06/2013, service code-S027.00 that the insurance company will have to pay VAT on aviation insurance premium to the state tax coffer," a high official of the NBR said.
It is mandatory for SBC to make payment as per the existing law and regulations, he added.
Since 1998, SBC has not been deducting VAT on aviation insurance premium from the national flag carrier.
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