Overall airfares are set to be more expensive as the National Board of Revenue (NBR) is soon going to impose value added tax (VAT) on different charges, including embarkation, landing and boarding.
However, a blame game is still going between the NBR and Civil Aviation Authority of Bangladesh (CAAB) over realising the proposed VAT.
The revenue authorities have become desperate to expand the tax net to achieve the revenue target for the current fiscal year, which many consider a huge amount.
To solve the tussle, a meeting is scheduled to be held between the officials of the NBR and CAAB today.
Expressing their displeasure with the new development, most of the local airliners strongly opposed the move, which they think would affect their business.
They said the new move would severely affect the industry, which is already incurring losses. Local passengers would also face the pinch of introducing the new charges.
According to section 18 under NBR VAT law 1991, there is an obligation to impose 15% VAT on all the charges.
Civil Aviation Authority of Bangladesh (CAAB) and all the airlines are not liable to collect VAT on different charges, according to the section 6 of the VAT law.
The NBR, however, warned that if the law is violated, CAAB will not be acquitted as a government organisation.
If CAAB fails to collect VAT from the airlines, chief of the regulatory body will be held liable and can also face penalty as per clause. NBR can also realise 2% interest on the due VAT.
Excise and VAT Commissionerate (North) of NBR also stated that CAAB is bound to pay total unpaid dues worth TK221 crore accumulated during a period of 2009-14.
Recently, NBR carried out an investigation where customs, excise and VAT Commissionerate (North) found that CAAB didn’t pay any VAT in the last four years.
Investigation team noted that the CAAB rented their establishment of Hazrat Shahjalal international Airport of different airlines, Bangladesh Parjatan Corporation, customs authority and Biman Bangladesh Airlines.
But, CAAB did not only fail to collect any VAT on the rented establishments but also from the salary of the consultant appointed by the regulatory body, according to NBR investigation team.
The NBR team also estimated that the revenue body could get over Tk18 crore for the period of 2009-14 had the CAAB paid the due VAT collected from various charges like embarkation, landing and boarding charges of different airlines.
In response to a letter from NBR commissioner, CAAB Chairman Air Vice Marshal M Sanaul Haq said the airlines pay embarkation, landing and boarding charges as per schedule no. 4 of the Civil Aviation Rules 1984.
CAAB has to change the rules if NBR wants to impose more charges beyond the schedule, said Sanaul Haq.
He also asked the NBR to withdraw due VAT worth Tk221 crore as the airlines sector is exempted from VAT law 1991.
Mizanur Rahman, member (Finance) of CAAB, however told the Dhaka Tribune that the CAAB is yet to get any response from excise and VAT Commissionerate (North) in this regard.
Ashish Kumar Ray, chief operating officer of Regent Airways, said: “Airlines will not pay any VAT from their own pockets. Ultimately, passengers mostly labourers, will have to face the consequences if the VAT is introduced.”
