Ship recycling yard equipment get VAT exemption

The government has exempted VAT (value added tax) including advance tax on import of equipment for ship recycling yards to promote environmentally sustainable practices.

An office order signed by National Board of Revenue (NBR) First Secretary (VAT Policy) Mashiur Rahman said that the VAT exemption will come into effect immediately and will remain in force till June 26, 2025.

The order said that the government is committed to converting all ship recycling yards into green ship recycling yards by June 26, 2025.

Failure to achieve this conversion within the stipulated time will result in a ban on the import of ships for recycling in Bangladesh after the stipulated time.

As a result, VAT exemption has been granted under sub-section (3) of section 126 of the Value Added Tax and Supplementary Duty Act, 2012.

Conditions of Exemption
The imported capital equipment shall be used only for the development of shipbreaking and recycling yards.

At the time of customs clearance, importers have to submit a certificate from an officer not below the rank of Deputy Secretary in the Ministry of Industries. This will ensure that the equipment is used only for this purpose.

The NBR has specified that equipment imported under VAT exemption facility cannot be sold or transferred within five years of import. If any equipment is sold or transferred before this time, the VAT (Value Added Tax) exemption will be withdrawn and all applicable taxes, including advance tax, will have to be paid.

In addition, both the VAT department officials and the revenue officials concerned will monitor compliance to ensure that the equipment is being used exclusively in shipbreaking and recycling yards and is not sold or transferred within the stipulated five years.

In addition, importers will have to submit an undertaking not to sell or transfer the equipment within the specified period on a non-judicial stamp worth Tk 300. This undertaking must be submitted to the customs authorities at the time of clearance.