Tk 81cr VAT will cripple projects, officials say

The managing directors of the two projects questioned the basis for imposition of the VAT and termed the amount "imaginary".

VAT should be on civil work only. Even training programmes have been taxed, they told The Daily Star.

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They said payment of such huge amounts of VAT when the projects are yet to start functioning will make those unviable and only benefit some dishonest traders.

In two separate notices, the managing directors (MDs) of Barapukuria Coal Mining Project and Maddhapara Hard Rock Mining Project have been asked to pay Tk 45,80,55,000 and Tk 34,88,44,770 VAT respectively.

The amounts have been estimated at the rate of 4.5 percent on US $ 175.5 million works in the coal mine and US $ 133.657 million works in the hard rock project. The works include design, consultancy, shaft sinking, civil engineering, equipment installation, underground road construction, training and commissioning of the two projects, according to the notices.

The notices, issued by Rajshahi Divisional Customs Commissioner Ali Ahmed on May 26 under Section 55 of the VAT Act of 1991, also asked the authorities to pay the VAT within 30 days of issuance of the notices.

Golam Mustafa, MD of the coal mining project, said, "Nearly Tk 800 crore including Tk 500 crore on suppliers' credit has already been spent while rise in dollar rate and taxes raised the project cost by Tk 350 crore. In this situation, payment of the huge amount of VAT is impossible".

Civil works a the coal mining project does not allow the customs authorities to collect more than Tk 14 crore VAT, he added.

Fazlul Karim, MD of the hard rock mining project said the Tk 4000 crore project will be a unviable if Tk 34.9 crore VAT is paid.

They however said they will seek funds from government to pay "reasonable amounts of VAT".

But Ali Ahmed said remarks of the MDs are "improper". The VAT has been imposed as per law, he said.