The Chittagong Port Authority in Bangladesh has taken a significant step by revoking the value-added tax (VAT) on port services for export-oriented industries.
According to the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Faruque Hassan, this move is viewed as a “positive” development for the country’s garment industry.
As per the BGMEA chair, the decision to withdraw VAT on port services is expected to “reduce operational costs” for businesses in Bangladesh, especially amid the challenges posed by the current global economic conditions.
Initially introduced by the National Board of Revenue (NBR) through two separate statutory regulatory orders (SROs) in 2019 and 2021, a 15 per cent VAT on port services for fully export-oriented industries and factories had been in effect.
The Chittagong Port Authority began imposing this VAT as a result of the Finance Act enacted last year, terminating the “zero rate of VAT” on services related to international transport and loading/unloading supplies from ships starting 1st July 2022, significantly impacting garment exporters.
Responding to pressure from exporters, BGMEA President Hassan and a delegation engaged in negotiations with the NBR in October of the previous year to advocate for the removal of VAT on port services.
