Confusion grips businesses over DEDO abolition

Businesses feel getting into a quandary as the government is poised to abolish the Duty Exemption and Drawback Office (DEDO) under a new law sans a better option.
Officials said when the new VAT and supplementary duty act takes effect on July 01, 2017, the DEDO will stand abolished as the law scraps the provision concerning its establishment. The DEDO came into being in 1987.
The new law, which is expected to be enforced from the next fiscal year by replacing the existing VAT law 1991, has omitted the post of Director General of DEDO in its relevant section and empowered respective VAT commissionerates to refund VAT.

However, the scrapping of the provision has created confusion among both VAT officials and the exporters as the DEDO office also refunds customs duty to the exporters.
In the VAT law 1991, section-13, and the customs act 1969, sixth chapter, there is a provision of duty exemption and drawback.
Officials said although the new law will scrap the provision of DEDO office, it would temporarily exist until June 30, 2018. Exporters can claim refund of the VAT and customs duty of previous years and settled in that period, officials said.
The NBR will have to issue a special order to this effect.
As per draft of the new VAT law, exporters will have to claim refund of VAT through the monthly returns to the VAT commissioner concerned. The new law makes no mention of anything about drawback of import duty.
In a recent letter, the DEDO office urged the National Board of Revenue (NBR) to address the problem in the budgeting exercise for fiscal year 2018-19.
Talking to the FE, DG of the DEDO Wahida Rahman Chowdhury said the office proposed incorporation of a position of 'commissioner, export refund' in the new VAT law for resolving the duty-drawback-related complexities.
"Inclusion of the section in the new VAT law is necessary for management of duty-drawback activity involving the exporters," she said.
DG of the DEDO can be positioned as commissioner, export, while DEDO office can be set up as export-refund office, she suggests.
The commissioner of export refund will conduct intensive analysis of co-efficient of produced products submitted to the VAT units, scrutinize fair market prices of products and monitor those.
The DEDO was formed with the technical assistance of the World Bank (WB) to facilitate refund of the paid tax to exporters.
Recently, exporters from leather, jute, garment and other exporting sectors sat for a meeting with the DEDO office over the matters of such transition.
Meeting sources said stakeholders opined for obtaining refund of the paid VAT from a single office rather than knocking at different commissionerates. They argued that VAT commissinerates are mainly focused on achieving the revenue target and usually found reluctant to give refund of the paid tax.
Md Shafiul Islam Mohiuddin, first vice-president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said businesses have no clear idea about refund process of VAT and duty after abolition of DEDO office.
"We have many unresolved recommendations regarding new VAT law. Businesses do not expect the government would implement the new law without taking the opinion of businesses 'on-board' into consideration," he added.
Abul Hossain, vice-chairman of Bangladesh Jute Spinners Association, preferred continuation of the existing system of duty drawback to the exporters.   
The DEDO office is currently automated and interconnected with Bangladesh Bank (BB) and customs houses. It provided a total of Tk 967 million worth of drawbacks in the form of VAT and customs duty in 2015-16.
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