The Bangladesh Economic Zone Authority (BEZA) has run into difficulty with its offer of Value Added Tax (VAT) waiver for developers of economic zones (EZs) as the Ministry of Finance (MoF) finally refused to give such fiscal concession, officials said. The BEZA is now pursuing the government to go by the announced offer of tax exemption for EZ developers on power production and purchase and other local purchases apart from petroleum. The Authority appears to have fallen in a quandary after circulating the offer among the prospective investors. The BEZA governing board meeting on February 18, 2015 decided to offer VAT exemption to the developers on bills against produced or purchased electricity that would be used in the economic zones. Prime Minister Sheikh Hasina had presided over the meeting. Earlier, another meeting on September 23, 2014, chaired by the finance minister, also had decided to offer the VAT waiver. Both the meetings also decided to offer VAT exemption to the developers on all local purchases from Domestic Tariff Area (DTA), except petroleum products. As per the decision, the BEZA circulated the decision on VAT waiver in its brochure and its entire Request for Proposals (RFP). In a meeting on January 13 last, chaired by the Principal Secretary at the Prime Minister’s Office (PMO), the NBR representative conveyed that the MoF had declined to accept the waiver proposal related to power purchase, production and local purchase of goods. “Investors may be discouraged from submitting proposals for developing EZs. Also, many of the completed processes will be hindered,” said BEZA Executive Chairman Paban Chowdhury in a letter to the Prime Minister’s Office. The PMO forwarded the letter to the National Board of Revenue (NBR) for taking necessary steps in this regard. BEZA’s credibility to the local and foreign investors will be tarnished and investors will be discouraged from making investment, it said. “The developers may not be interested to initiate proper steps to attract investors as the facility is currently valid for only unit investors,” the BEZA said. The Authority cited EZ examples of many countries where such facility is in place, it added. “Developers are important investors in development and operation of the economic zones.” Talking to the FE Saturday, Paban Chowdhury said the Authority is optimistic about getting the facility for the developers of economic zones. “Currently, the government offered the facility for the investors. Developers should be considered as large investors in EZs,” he said.
