The government has offered exemption from VAT in case of import of large vessels above 5,000 deadweight tonnes to facilitate sea-borne trade.
The National Board of Revenue (NBR) issued Wednesday an order, exempting importers from paying 15 per cent Value Added Tax (VAT) on the import of ocean-going ships.
First secretary of VAT policy wing Hasan Muhammad Tarek Rikabder signed the order.
The revenue board took the decision considering the country's dependence on imported ships as 95 per cent of the import purchase is being conducted through the ocean-going ships.
But the importers have to meet certain conditions to be eligible for the waiver.
The ocean-going ships have to be registered as national flag-carriers of Bangladesh and compliance with the international rules of the International Maritime Organisation and other conventions ratified by the country.
Ships over 15-year old will not be allowed to import under the facility. The ships have to operate as national flag carriers for shipment of goods for at least five years and will not be allowed to sell or hand over before that timeframe, according to the order.
In case of any unfavourable circumstances such as loss in businesses or accidents or the need for scrapping the ships before five years, the importers will have to pay the 15 per cent VAT.
Importers will have to give undertaking on the non-judicial stamps to the relevant commissioner at the time of assessment.
The importers of ships have to submit bank-issued proceed realisation certificate (PRC) after an interval of one year against foreign currency income to the local VAT office.
For importing oil tankers under the facility, the importers will have to bring double hull or double bottom ships according to international convention for the prevention of pollution from ships (MARPOL convention) to avoid unwanted accident.
At least 70 per cent of the employees and workers in the ships have to be Bangladeshi citizens and Bangladeshis would get preference for hiring.
Importers have to give an undertaking on the compliance of the conditions and furnish details on deadweight tonnage and light weight tonnage capacity, manufacturing country, manufacturing year of ships to the revenue board.
The board will have the authority to scrutinise the compliance of the conditions after one year of import of ships according to the order.
In case of non-compliance found through investigation, all of the payable VAT would be realised from the importers.
Apart from the 15 per cent VAT, there are 5.0 per cent advance income tax and 1.0 per cent customs duty on the import of ships.
The government had levied a 15 per cent VAT on import of ships in 2014. Before that, importers were enjoying exemptions from the payment of VAT.
Following proposals of the local stakeholders including the Bangladesh Ocean Going Ship Owners Association (BOGSOA), the NBR has conducted a thorough scrutiny and held a series of meetings with the stakeholders to assess the need for the VAT exemption.
Officials said the NBR order would facilitate import of large ships, which declined to 38 last year from 63 in 2014.
SK Basir Uddin, vice chairman of the association, welcomed the decision but found the restrictions on the import of at least 15-year-old ships to be "unjustified".
Saying that import policy allows the purchase of ships of up to 25 years old, he called upon the tax-collecting authority to bring uniformity in the rules.
He said ship is a capital-intensive business and the government should lift advance tax, he said.
