NBR asks CAAB to deduct VAT at source on airport fees

Sohel Hossain Patwary

19th November, 2020 08:37:15 printer

NBR asks CAAB to deduct VAT at source on airport fees

The National Board of Revenue (NBR) has instructed the Civil Aviation Authority of Bangladesh to deduct VAT at source from the airport security and development fees imposed on departing air passengers.

The NBR has issued the instruction to the CAAB as a dilemma has arisen over the payment of VAT on the airport charges.

A meeting was held recently at NBR office where representatives from CAAB were present to discuss the various issues over VAT and other duties.

NBR member (VAT, Audit and Intelligence) Dr Abdul Mannan Shikder presided over the meeting.

It is mentionable that CAAB imposed passenger security fee and airport development fee at various rates on air tickets of departing passengers after getting approval from the Finance Division of the finance ministry from 1 August.

In this case, the Civil Aviation authority has to pay value-added tax on the newly collected charges and fees.

However, some airlines are directly paying the VAT against the charges while CAAB is deducting VAT at source from some other airlines.

As there is no uniformity over the payment of VAT, NBR directed the Civil Aviation Authority to deduct VAT at source from the airlines.

According to the CAAB circular, passengers who travel within the domestic routes pay an airport development fee of Tk 100 and passenger safety fee of Tk 70 per trip.

For travel to SAARC countries, passengers pay $5 for airport development and $6 for passenger safety and for the countries other than SAARC, the airport development fee is $10 and the passenger safety fee is $10.

As per the VAT and Supplementary Duty Act-2012, 15 per cent VAT is applicable on the fees and charges the government agencies, semi-government agencies, autonomous bodies and local authorities receive for creating any facilities, providing licences and renewal of those services.

As per the rules, the CAAB is a VAT deducting authority and it will have to deduct the VAT as per VAT Deduction at Source and Collection Rules-2020.