The Bangladesh Trade and Tariff Commission (BTTC) has recommended exempting the income of indenting services from value-added tax (VAT) as these earnings are recognised as export earnings by the government.
Currently, indenting agents in the country are required to pay a 5.0 per cent VAT on their earnings. The sector's earnings primarily come from providing services to various exporting sectors.
In response to frequent requests from local indenting agents, the Ministry of Commerce has sought an opinion to determine the next course of action.
Leaders of the Bangladesh Indenting Agents' Association (BIAA) said that indenting is a government-recognised service export sector and, as per Clause 24 (5) of the new VAT Act-2012, VAT on service exports should be at zero per cent.
The indenting sector has also been included as a service sector in the Export Policy-2021-24. In 2018, the government officially declared the sector an export service sector.
The Bangladesh Trade and Tariff Commission has also suggested continuing with the existing registration fees for the sector. However, the entity believes that the current indenting registration fee is comparatively higher.
Under the current system, indenting agents are required to pay Tk 50,000 and Tk 25,000 to the government for obtaining a new export registration certificate (indenting service) and renewal, respectively.
According to the Trade and Tariff Commission, the indenting business is not directly involved in manufacturing any product or value addition.
Preferring anonymity, an additional secretary at the commerce ministry said, "We received a suggestion from the BTTC that we asked for earlier. We are scrutinising the issue."
Earlier, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and Indenting Agents' Association (BIAA) requested the finance and planning ministers to withdraw the VAT.
The FBCCI and BIAA mentioned that due to the imposition of VAT, some 90 per cent of businesses are operating their activities through proforma invoices.
The indentors have been operating ethical business practices complying with all existing government rules and regulations since 1978, they said, claiming that this sector was facing serious challenges due to the VAT imposition.
An indentor claimed that VAT was imposed by the revenue regulator on indenting services illogically. He said that there should not be any VAT on indenting services according to the existing VAT law and urged the government to withdraw the VAT as early as possible for the betterment of the sector.
The indenting agents' association is a national body of indentors licenced under the Ministry of Commerce and incorporated with the Registrar of Joint Stock Companies & Firms. The association is affiliated with the FBCCI as an 'A' class association.
According to the BIAA, withdrawing the existing VAT as per the existing VAT Act would significantly contribute to the flourishing of the indenting business in the country.
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