Traders and businesses now have until November to renew their trade licences – a two-month extension – while businesses and city corporation authorities try to resolve a dispute over a steep rise in renewal fees.
In addition to an up to 500% hike in fees for some categories of trade, the dispute centres on an attempt by Dhaka’s two city corporations to collect a four-year backlog of VAT charges that it has neglected to collect since 2011.
Normally, the deadline for renewing trade licences ends on September 30.
On March 2, the Local Government, Rural Development and Cooperatives Ministry issued a gazette hiking trade licence fees by an average of 263%, setting off opposition from traders and leading business chambers.
Business leaders said the fee hike would adversely affect entrepreneurship, particularly small and medium enterprise.
“The Local Government Division secretary has extended the deadline for two months until November 30,” Bangladesh Dokan Malik Samity President S A Quader Kiron told the Dhaka Tribune yesterday.
He said the government had formed a seven-member committee consisting of three government officials and four business leaders and headed by an additional secretary, to rationalise the hike, which comes to around 400-500% for small and medium traders.
According to the new rates, some traders have to pay six times the current amount to renew their trade licences.
Traders will also have to pay 15% VAT and Tk500 as source tax with the charges.
When contacted, National Board of Revenue (NBR) officials said there was nothing they could do about the situation because the VAT was imposed four years ago but city corporation officials did not charge it.
“This is now their issue ... still, discussions are going on to resolve the issue,” said an NBR high official.
DNCC chief revenue officer Md Momtaj Uddin said: “Somehow we overlooked [VAT collection],” but added that they were now complying with it. Dhaka South City Corporation deputy chief revenue officer Md Saidur Rahman Khan said they were merely complying with a gazette issued by the NBR.
Although the VAT was imposed in 2011, city corporation authorities did not collect them. They are now demanding that businesses pay the VAT due for the last four years together with this year’s VAT in order to renew their trade licences.
This decision has sparked protests from businesses and traders and caused many to keep away from renewing their trade licences.
“Last year I renewed my licence for Tk1300, but now they are asking for Tk7100 for the same service. That is irrational.
“I returned from the city corporation offices without renewing my licence and will not do so until the fees come down to a tolerable level,” said Shafin Ahmed, a medical drug trader based in the capital’s Gulistan area.
Mohammad Yakub Ali, a Mohammadpur Krishi Market trader said he had recently exchanged angry words with Dhaka North City Corporation officials over the issue.
“I have been in business for 10 years with this trade licence. The authorities are now asking me to pay the increased rate, along with four-year-old VAT charges and VAT for this year.
“They said they would not renew the trade licence without the due VAT, so I came home with out renewing it,” he said.