Look into plea for VAT waiver on licence fees

Finance Minister AMA Muhith has asked the revenue board to weigh the proposal of the apex trade body for Value Added Tax (VAT) waiver on trade licence fees.
Exemption of VAT on trade licence fees is a longstanding demand, since 2010, of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) for making start-ups easier.
The FBCCI, in a letter on February 13, reiterated its request to the finance minister for waiving VAT on trade licence fees, registration fees and other fees.
Responding to the request, the finance minister in a note asked the NBR to look into the matter.
"The issue needs to be examined," the minister wrote last week on the proposal of the FBCCI.
He posed a question: "Is it necessary to collect VAT from licence fees?"
In a letter, FBCCI president Abdul Matlub Ahmad said trade licence or registration is an administrative regulatory service that the government agencies provide. VAT should not be imposed on those services according to the existing law.
Earlier, the NBR had rejected requests of the apex chamber and the Local Government Division for abolishing VAT on trade-licence fees.
The existing law mandates the government, autonomous and local government organisations to collect VAT at source at the time of receiving services from service-providing agencies.
Those organisations deposit the tax money with the public exchequer. The entities are not empowered to collect VAT at source for providing services such as trade licence or registration.
Those are involved with administrative duties, not any commercial purpose.
The VAT officials are collecting 15 per cent VAT on trade-licence and other registration fees.
An NBR official said trade licence creates opportunity for doing business for licence-holders and it is considered creation of a facility.
"The NBR is collecting VAT from many of sectors like that as per law," he said.
The issue of waiver of VAT on trade licencing has been brought in to focus by the apex chamber's leaders on several occasions with the NBR.
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