Duty drawback for exporters

Dhaka,  Tue,  27 June 2017
Published : 20 Apr 2017, 20:30:05
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Duty drawback for exporters

With the introduction of the new value-added tax (VAT) law, some organisational changes are set to take place within the National Board of Revenue (NBR). An important step in this direction is the abolition of DEDO (Duty Exemption and Drawback Office), which as its name suggests is the designated agency under the NBR to refund duties already paid by exporters against import of raw materials for export manufacturing. The new VAT and Supplementary Duty Act-2012 is scheduled to be implemented from July 1, 2017, and the DEDO is going to be abolished from that day. 

Under the new VAT law, there is a provision for refund of only VAT through VAT commissionerates. The law, however, says nothing about refund of import duty. The decision for scrapping the DEDO has thus created confusion over the process of refunding customs duty. The members of the business community have so long been receiving refund from a single point - DEDO; hence its abolition at the outset of the next fiscal has given rise to worries about collecting drawbacks from various VAT offices. It may be noted that drawback is used exclusively for refund of duties and taxes against export of products for which there is no bonded warehouse facility. Under the provisions of the Customs Act- 1969, all duties and taxes paid on inputs and raw materials used for the manufacture of exported goods or services are to be refunded as drawback except income tax paid in advance and certain types of supplementary duties paid on the inputs/raw materials. Reports say in the fiscal 2015-2016, DEDO refunded around Tk 967 million that included Tk 755 million in VAT and Tk 212 million in import duty. Currently, drawback applies to a host of manufactured exported products of which the key ones include readymade garments, specialised textile, jute goods, leather and plastic goods.

The NBR has been assuring the members of the business community that implementation of the new automated VAT system would do away with a lot of hassles and complications that the old manual system was prone to cause to most businesses. But lack of clarification on duty drawback appears to have caused uncertainty. Although the new VAT law mentions that the DEDO, even after its official demise, would continue to work on backlogs, it seems less than convincing how the new arrangement would take care of  the changed scenario in a smooth manner. 

To ensure that the issue does not trigger further worries, it is very important for the NBR to consult the stakeholders in an attempt to get to know their precise areas of concern and sort those out before it is too late. With less than two months to go before the new system comes into operation, it is the expectation of all quarters, not just the businesses, that through successful interactions the worries would be removed and in the process the overall trade and commerce in the country spared of undesirable constraints.  
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