Only export-oriented factories eligible: NBR | The Daily Star
12:00 AM, September 27, 2019 / LAST MODIFIED: 12:00 AM, September 27, 2019

Utility VAT Exemption

Only export-oriented factories eligible: NBR

Only production units of export-oriented companies will be eligible for exemption from value added tax (VAT) charged on electricity, gas and water bills, said the National Board of Revenue (NBR) yesterday.

The revenue authority said it would not exempt VAT on utility bills of offices established in other buildings and areas.

The notification came three months after the NBR waived VAT on utility bills of fully export-oriented factories established both inside and outside of export processing zones (EPZs) to facilitate higher shipments.

In that order of June 13, the NBR also exempted VAT on charges of services taken by export-oriented firms from security service providers, suppliers and transport contractors. 

The same will be available on expenditure for workers’ welfare and recreation, laboratory test, port use, insurance, clearing and forwarding and on shipping bills.

However, the tax collector did not clarify how fully export-oriented factories would avail the benefit.

In yesterday’s order, the NBR attached conditions. 

One says that operators of every export-oriented factory will have to apply to the respective field office mentioning the ID numbers of meters used in the manufacturing units.

It said waiver would not be applicable if a meter was also used by factories that do not make items for export.

“We have seen that there are industrial complexes having residential and other buildings. If a single meter is used for all buildings including manufacturing units, there will be no VAT exemption,” said an NBR official.

The official said VAT exemption had been provided to fully export-oriented factories in the past. The benefit is also given under the VAT and Supplementary Duty Act 2012 that became effective from July. 

“We have defined the methods on how the exemption would be provided,” said the official.

In its order, the NBR said companies would have to submit proceed realisation certificates as proof of receipts from shipment along with VAT return.

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