Economic Reporter :
Finance minister Abul Maal Abdul Muhith has in principal agreed on a proposal of the Association of Travel Agents of Bangladesh for shifting the liability of value-added tax on their commission earnings to passengers and collecting the VAT adding with ticket fares.
Muhith recently instructed the revenue board to examine the issue and place a report to him.
‘I think the proposal is acceptable,’ he wrote in a note to the NBR.
The ATAB has also placed the proposal to the NBR.
In the proposal, ATAB said that VAT collection would be easier and transparent if the VAT is collected adding with ticket price.
The association, however, has always demanded exemption from the VAT on their commission earnings from sales of ticket but the revenue board rejected the plea.
Rejecting the VAT exemption plea of the ATAB, the NBR on October 26, asked them to pay the VAT on the earnings.
Currently, VAT at the rate of 15 per cent is applicable on commission which travel agents get from airlines on sale of tickets.
Officials of the revenue board said that they would send a report to the finance minister after examining the proposal.
A high official of the NBR on Thursday told The New Nation that it was not logical to shift the liability of VAT on commission of travel agents to passengers.
Commission is the income of travel agents, so VAT on it should be paid by them, he said.
According to the ATAB, local travel agents sell only 34 per cent of total tickets of airlines operating in Bangladesh while the remaining 66 per cent tickets are sold by other means including airlines outstation or foreign country sales, online travel agency, credit card and direct airline sales.
The government does not get any VAT and advance income tax from those 66 per cent ticket sellers, it said.
