United Nations’ agencies in Bangladesh have sought upfront VAT exemption for locally procured goods and services for official use and project implementation, terming the refund process time-consuming and tedious.
‘If such request is granted, it will foster the UN to prioritise investing more time and effort to engage on its development and humanitarian interventions meaningfully,’ said UN resident coordinator in Bangladesh Mia Seppo.
In a letter sent to foreign secretary Masud Bin Momen on October 4, Seppo said that the UN agencies had not been getting any VAT reimbursements from the Duty Exemptions and Drawback Office (DEDO) of the National Board of Revenue since July, 2019 after the implementation of new VAT and Supplementary Duty Act-2012.
Tedious and time-consuming procedures established in the VAT provisions, and the limited six-month period set out in the VAT order is delaying the refund process, she said.
DEDO has neither processed and reimbursed UN agencies VAT claims, nor the agencies have received an official response from DEDO on the status of such outstanding reimbursements, she said.
She said that the UN agencies were recording huge VAT receivables from the government for not getting VAT reimbursements as well as incurring financial losses.
The agencies are exempted from payment of VAT on local purchase of goods and services as per the Convention on the Privileges and Immunities of the United Nations and the United Nations Development Assistance Framework.
The agencies, however, have to pay VAT to vendors at the time of procurement and later DEDO refund the VAT following claims from the agencies.
Seppo wrote that the UN hoped that the government would consider the concerns of the agencies and advise the NBR to accelerate the refund process to avoid the prevailing challenges on the side of both DEDO and the UN agencies.
In the letter, she also requested for granting upfront VAT exemption status to the UN in Bangladesh for locally procured goods and services for official use and project implementation.
The Office of the United Nations Resident Coordinator in Bangladesh also sent copies of the letter to NBR chairman Abu Hena Md Rahmatul Muneem.
Officials of the NBR said that DEDO was now expediting the refund procedures for the agencies.
The agencies will soon get their VAT refund, they said.
They said that a huge backlog of reimbursement claims was created due to the changes in the VAT law which initially incorporated a provision of issuing refund from field-level VAT offices.
Later, the NBR amended the law to empower DEDO to provide refund to the UN agencies and other privileged organisations, they added.
As per the provision, the UN agencies first applied to the field-level VAT office for VAT reimbursements.
Later, the applications were transferred to DEDO in line with the amendment in the law.
The UN agencies would get VAT refund from DEDO since July, 2019.