Grameenphone has been refraining from paying value-added tax (VAT) on rentals of Bangladesh Railways' optical fibre since March 2018 as it is not being furnished with invoice by the revenue administration as stipulated by the laws.
The amount of unpaid VAT by Grameenphone is Tk 20 crore and the due amount is only increasing over time, according to a letter from BR to the National Board of Revenue in October last year.
In response, the NBR asked its field office -- Large Taxpayers Unit (LTU)-VAT -- to take action as per law.
The country's largest operator has taken a 20-year lease of the railway's optical fibre in 1997; the lease was extended for another ten years to September 2027.
Based on the contract, Grameenphone had been paying Guaranteed Annual Rentals (GARs) to BR in every quarter including VAT on the amount.
And the BR had been issuing a certificate to the mobile phone operator in line with a 1997 order of the NBR. The system had been in effect until December 2017, according to BR.
But Grameenphone stopped paying VAT from March 2018 on the ground of non-issuance of invoice, officially termed as Mushak-11 or Mushak-6.3, the BR said in its letter to NBR seeking required action.
"We have sought directive from the NBR," said a senior official of the BR.
Contacted, an official of LTU VAT said the field office sought explanation from Grameenphone regarding non-payment of VAT on GARs. The mobile operator responded and appeared in a hearing.
Later, a committee has been formed to examine the VAT-related issues of the mobile operator, he said.
Grameenphone gave several reminders to the BR for valid invoice, which it is entitled to as a service recipient, to enable payment of VAT on GAR, said Md Hasan, the operator's head of external communications.
The tax authority has instructed Grameenphone to collect VAT at source applicable to GAR payments following past practice.
"But it did not say anything about the legal right of Grameenphone to have a valid VAT invoice and non-deduction of VAT at source for payment made on account of [Nationwide Telecomm-unication Transmission Network (NTTN)] service rendered by the Bangladesh Railway."
"If Bangladesh Railway issues a valid VAT invoice, Grameenphone will make VAT payment to Bangladesh Railway without any deduction," he added.
The episode is another example of stalemate over VAT between the NBR and mobile operators.
Over the last several years, mobile operators and the Bangladesh Telecommunication Regulatory Commission (BTRC) have been in an impasse over payment of VAT on various services that they receive from the regulator.
The deadlock revolves around the issue of VAT registration of BTRC.
Mobile operators demand that the telecom watchdog issues VAT invoice to them against payment of VAT on revenue sharing, spectrum charge and other services as in the absence of chalan they cannot claim input tax credit or rebate during final payment of VAT to the public coffer.
The BTRC said it cannot issue VAT invoice as it is not a VAT registered entity.
In November last year, the telecom watchdog sought 'effective measures' from the NBR informing that mobile operators have not paid VAT on revenue sharing, spectrum charge and other services since the BTRC is not a VAT registered entity.
The NBR is yet to take any decision in this regard.
"We are working on it," a said another official of VAT at the NBR.