In the face of repeated calls from the exporters, Bangladeshi authorities have withdrawn value added tax (VAT) on port services for export-oriented industries to help businesses facing downturn amid the global economic crisis.
The National Board of Revenue (NBR) had granted the provision of 15% VAT on port services for both imported and locally manufactured goods for fully export-oriented industries and factories by issuing two separate statutory regulatory orders (SROs) back in 2019 and 2021.
However, last year’s Finance Act ended the “zero rate of VAT” on services relating to the ‘transportation of international transport services and supplies relating to loading on and unloading from ships’, from 1 July 2022, after which the chairman of the Chittagong Port Authority had to start collecting 15% VAT on port services – which hit garment exporters hard, they claimed.
Some 45% of containerised goods, mainly raw materials, imported through Chittagong port came under the purview of VAT, raising the cost of exports, mainly garments.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) began negotiations with the NBR to lift the VAT on port services. BGMEA president Faruque Hassan and a delegation had a meeting with the NBR in October last year seeking the withdrawal of the VAT.
Abul Kalam Azad, a garment manufacturer, said, the imposition of 15% VAT on port services had “lowered our competitiveness” with other global manufacturers.
“If we can make goods at low cost, we can export them at reduced price,” he said.
Today, Mr Azad thanked the revenue board for finally lifting the VAT on port services.
Meanwhile, last year Bangladesh’s ports and inland container depots saw a significant fall in container and ship handling for the second consecutive year as import and exports declined .
Data shows that Chittagong port handled a total of 3.05m teu in 2023, compared with 3.143m in 2022. Some 4,103 ships came to the port last year, around 6% fewer than in 2022.
Inland container depots handled 877,689 teu of containers in 2023, against 983,452 teu in 2022, around 11% less.