October 31, 2020, 4:08 am


Abu Taher Bappa

Published:
2020-09-17 11:11:15 BdST

Allegations surface against three state oil firms over evading Tk 25b VAT


The VAT authority unearthed VAT evasion worth Tk 24.73 billion allegedly by three subsidiaries of Bangladesh Petroleum Corporation (BPC) in a recent scrutiny.

The Chittagong Customs, VAT and Excise Commissionarate has recently made the demand and served a show cause notice on the BPC's units seeking explanation to the unpaid tax.

Of the amount, Padma Oil owes VAT worth Tk 19.52 billion, followed by Meghna Petroleum Tk 3.11 billion and Jamuna Oil Tk2.10 billion.

Officials said the VAT zone has given 15 days' time to explain why the companies failed to repay taxes.

The amount accounts for the alleged unpaid VAT on fuel supply to foreign airlines and the differences in VAT on fuel price at the import and local stage.

Officials said they raised the demand after scrutiny and are confident about realising the amount.

Commissioner of the Chittagong VAT zone Mohammad Emanul Hoque acknowledged they have issued the show cause notice to the BPC's subsidiaries over the issue.

When contacted over phone, managing director of Padma Oil Company Limited Md Masudur Rahman said the oil company has sought 60 days' time to explain the reasons.

He said they have to look into the previous documents as the demand has been raised on the basis of previous years' investigations.

He, however, said the state-owned entity has no intention to evade VAT.

There might be some issues as the company has to supply duty-free products, he added.

Officials said the VAT authority found the evidence of supplying fuel to foreign airliners by Padma Oil, but failed to show foreign exchange repatriation-related documents.

As per the VAT law, export of any products is VAT-free.

They said the sales of fuel could not be considered export unless they can show foreign exchange repatriation and VAT would be imposed on the entire amount of fuel sales worth Tk 18.80 billion.

The VAT zone also demanded Tk 300 million on account of difference in purchase prices of fuel at the import stage and selling price at the local stage and another Tk 420 million on account of unpaid VAT deducted at source on purchase.

From Meghna Petroleum and Jamuna Oil, the VAT wing claimed the unpaid tax on the differences between import and local stage prices.

The VAT wing has raised the demand from 2014-15 to 2018-19, June 30.

The officials said they have held a series of meetings with the oil companies' officials to discuss the pending matter.

The demand has been raised after the BPC subsidiary companies officials failed to respond to the queries of the VAT authority on the claims, they said.

The officials said the VAT authority has followed the calculation method of the power and energy ministry on energy prices.

They, however, alleged that the BPC's subsidiary companies are sometimes showing the reluctance to provide required information to the VAT authority.

Officials said the VAT zone has also found the oil companies of BPC imported furnace oil enjoying the VAT-free facility, but sold the fuel to the Bangladesh Power development Board (BPDB) with imposing VAT.

However, the BPC had cleared previous dues worth Tk 13.88 billion until FY 2013-14.

VAT officials said such a big chuck of VAT demand, if realised, raised the hope among the officials to offset the shortfall of VAT collection this year.

According to NBR data, the VAT wing faced Tk21.11 billion shortfall in the month of July, posting a 9.07 percent negative growth year-over-year.

Unauthorized use or reproduction of The Finance Today content for commercial purposes is strictly prohibited.


Popular Article from Business