The Bangladesh Garment Manufacturers and Exporters Association has sought exemption from paying value-added tax on service charges they pay to the service providers.
The BGMEA, apex trade body of export-oriented apparel makers, has also sought exemption from paying VAT on charges paid for getting services related to security, transport and procurement providers.
In a letter written last week to the National Board of Revenue, the apparel makers argued that they should be exempted from that kind of VAT as generally export-oriented RMG sector was free from paying VAT at import and export levels.
VAT on service charges increases the cost of production and hampers export, it said.
But at service stage, the RMG sector, like some other sectors, is responsible for deducting VAT while making any payment to the service providers for rendering various services including security, procurement, transport, laboratory, audit, courier, building construction, legal consultancy and services received from outside of the country.
They have to deposit the deducted VAT to the government exchequer.
The factories which are not deducting authorities have to pay VAT with the service charge.
In the current financial year 2014-2015, the revenue board exempted the export-oriented RMG sector from deducting or paying VAT on charges for receiving security service, transport and supplier service and the services rendered from outside of the country.
Leaders of the RMG makers’ association said that field-level VAT officials were demanding VAT on service charges paid in previous years.
‘How will we pay the VAT as we did not deduct VAT at sources on the payment for getting the services in previous years?’ questioned BGMEA vice-president Shahidullah Azim, while talking to New Age on Saturday.
On the other hand, the RMG sector is enjoying VAT-free facility at different stages including export and import. So, the sector should be waived from the VAT, he said.
He said that apparel manufacturers did not maintain accounts or deduct VAT on charges paid to the providers of security, transport and procurement providers.
So, it is not possible for them to pay the VAT now, he said.
NBR officials told New Age that they got the BGMEA application and would make decision after making proper scrutiny on it.
-With New Age input
