Finance minister Abul Maal Abdul Muhith has asked all government departments to procure locally available and consumable goods for development projects shunning import of the products.
He has made the directive through the National Board of Revenue to help domestic industries to flourish and reduce the cost related to taxes and duties required for project implementation, NBR officials said.
Muhith issued the instruction on March 25 while rejecting a proposal of Bangladesh-India Friendship Power Company Limited seeking duty-free imports of thermo-mechanically treated bars and other consumable goods from India for the construction of Rampal coal-fired power plant near the Sundarbans.
The minister in a note agreed with observations of NBR which argued that procuring the products, both consumable and locally available, from the domestic market would help the local industry flourish.
Using the local goods will also reduce the cost of the project implementation as there are taxes on import of those items, NBR pointed out.
NBR has never offered exemption against import of such consumable goods and offering such exemption to the power plant will also create an example and other stakeholders will lobby to get the benefit, it said.
Value-added tax wing of the NBR on March 27 in a letter to Power Division secretary Ahmad Kaikaus informed the division about Muhith’s rejection along with his directives.
Muhith asked all departments to include the issue of procuring locally available and consumable goods on priority basis in the procurement agreement and implementation agreement to be signed in future.
He also asked the ministries and divisions to estimate the total cost of development projects keeping required allocations for payment of all types of applicable taxes, including customs duty, value-added tax and income tax.
Final opinion of the revenue board on tax and duty issues should also be reflected in the project implementation agreement and other documents, he said.
Officials said that the revenue board had started informing the decisions of the finance minister to ministries and divisions.
In March, NBR in a separate letter also declined to offer tax benefit to Ashrayan-3 Project of the Prime Minister’s Office and advised the project director to arrange required allocation for payment of VAT and other taxes.
PMO is implementing the project at Bhashanchar, an island at Hatiya Upazial in Noakhali, with cost of over Tk 2,300 crore to rehabilitate one lakh Rohingya refugees.
In the letter to project director of Ashrayan-3, NBR referred one of its circular issued in March last year which barred the government agencies from seeking tax exemption for development project implementation and suggested to keep required allocation for the purpose.
On the same ground, NBR on January 21 declined to waive VAT to the disaster management and relief ministry on construction of 10,000 latrines with financial help of UNICEF for Rohingya refugees.
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