Despite hectic efforts, Civil Aviation Authority of Bangladesh (CAAB) would not be able to skip payment of 15% Value Added Tax (VAT) on different aeronautical charges collected from different airline operators.
The National Board of Revenue (NBR) yesterday made it clear that CAAB, the aviation regulator, would have to pay the VAT as it was bound to pay it as per the existing law.
Customs, Excise and VAT commissionerate, Dhaka (North) held a meeting at its office to resolve the crisis over realising the unpaid revenue from CAAB.
During the meeting, revenue authorities informed the CAAB officials that they have to pay 15% VAT, including the unpaid VAT for the last five years as CAAB was responsible to pay it.
According to a demand notice issued by the NBR field office in February this year, the aviation regulator have to pay the unpaid VAT of around Tk221 crore on various aeronautical charges during a period of 2009-14.
Usually, CAAB collects a number of aeronautical charges from airways including landing, parking, housing of aircrafts, boarding bridge, and embarkation charges.
The NBR has recently undertaken a desperate move to realise VAT from various sector as part of expansion of its revenue base.
The revenue authorities is assigned to mobilise Tk1,76,370 crore revenue for the fiscal year 2015-16.
To meet the gigantic target, which is around 30% higher from the just concluded fiscal, the NBR is becoming desperate to find out potential sectors and introduction of new strategies to meet the target.
Although the NBR has been demanding the VAT for long from the aviation regulator, the CAAB was opposing to pay it just repeatedly saying: “It needs to amend the Civil Aviation rules-1984 for making this into effect.”
“CAAB collects a number of charges from the airline operators which are not exempted from VAT payment. As it did not collect the mandatory VAT over the charges, the NBR has asked the CAAB officials to comply with the VAT law,” said an NBR high official.
Attending the meeting, CAAB opposed to pay the unpaid VAT of Tk221 crore as it claimed there would be new complexities in collecting the due VAT from the airliners. But, they cannot avoid their responsibilities just uttering some irresponsible words, said the NBR official.
The aviation regulator, however, agreed to collect the VAT from the airliners from the current fiscal year.
Asked why the demand notice was not issued for unpaid VAT before 2009, he also said: “The NBR has the authority to ask for the unpaid VAT anytime”
As contacted, a top CAAB official on condition anonymity stated that they werenot in a position to make any comment, as the issue was still a debatable one.
As per the regulation, from now on, CAAB will collect VAT from the airways companies and will deposit it to the government exchequer, he added.
As the NBR is all set to enforce the VAT, passengers will have to spend more for traveling through airways, airline operators told the Dhaka Tribune.
As the airline operators are not going to pay the VAT from their own pocket, it will have to be collected from the passengers through increasing the fares, they added.
“We are already counting huge losses in business. We do not have the ability to pay the huge amount of previous VAT,” said a CAAB official.
He also said: “We will appeal to the government seeking exemption of the unpaid VAT,” Regent Airways Chief Operating Officer Ashish R Choudhury told the Dhaka Tribune.
“If the government imposes VAT on aeronotical charges, we have to comply with that. It will not be a pressure as the money will be collected from the passengers pockets,” said United Airways Deputy General Manager (marketing) Kamrul Islam.
However, he denied to make any comment on the issue of unpaid VAT before the company receives any official notice from the authorities concerned.