Karnafuly Ship Builders exempted from VAT on supply of dredgers to BIWTA

The National Board of Revenue (NBR) granted VAT exemption to the Karnafuly Ship Builders Limited after the Bangladesh Inland Water Transport Authority (BIWTA) failed to make a payment in dollars for four dredgers it had bought from the shipbuilder.

The BIWTA had procured four suction dredgers from Karnafuly Ship Builders Limited through an international tender.

Purchases made through international tenders are deemed exports for Karnafuly Shipbuilders, for which VAT is not applicable, but the payment should be made in foreign currency. In the current economic situation, however, the BIWTA was unable to pay in dollars, prompting it to request the NBR to consider the payment in the taka as deemed export.

Following the request, the NRB made the exception in a special order issued by the government on 14 March.

The NBR said that if the bill is not paid in foreign currency, it cannot be considered as deemed export. However, the four dredgers in question have been exempted from VAT on the condition of obtaining a no-objection certificate from the central bank in paying the price in the taka.

A senior official of NBR's VAT wing told The Business Standard, "If the company [Karnafuly Ship Builders] received payment in dollars, it would not have to pay VAT as deemed export. Now due to the current economic situation, since the BIWTA is paying in taka, it would be against the law to treat it as a deemed export and exempt it from VAT. That is why VAT is exempted only for those purchases."