UAE requests Tk 600cr VAT waiver for 3 Emirati airlines

Business Desk :
The United Arab Emirates (UAE) has requested a waiver of value added tax (VAT) on three Emirati airlines retrospectively, saying that such levy is against globally accepted standards.
Following assurances of considering this remission by the PM herself to a UAE diplomat, the UAE embassy recently relayed the fliers’ plea to the Foreign Ministry to this end, officials said.
Emirates, Flydubai and Etihad have urged the Bangladesh authorities to waive an estimated Tk600 crore VAT on aeronautical and non-aeronautical charges from 2008 to 2018.
The UAE embassy in Dhaka forwarded the letters, sent by Emirates, Etihad and the budget airline, Flydubai, to the ministry concerned recently.
Charging taxes like VAT with retrospective effect is not in accordance with internationally accepted standards as the airlines are unable to recover this (claimed) VAT from customers, read the letter sent by the embassy.
The ministry has recently forwarded the letter for consideration of the National Board of Revenue (NBR).
In July 2015, the VAT north zone imposed VAT with retroactive effect on those relevant charges from January 2009.
In August 2017, the Appellate Division of the Supreme Court issued a ruling that VAT is applicable to aeronautical charges.
The verdict was reviewed by the Chief Justice and it was given in favour of the NBR.
Imposition of VAT on the relevant charges in Bangladesh by CAAB on international air transportation services of passenger or cargo is directly contradicting acceptable policies on taxation published by International Civil Aviation Organization, a specified UN agency, said the letters.
Bangladesh is a signatory to the Convention on International Aviation (Chicago Convention) and has provided its notification of the Adherence to the Chicago Convention in December 1972.
Based on international standards, international air transportation services are typically either zero-rated or exempted from VAT with the right of recovery of input VAT. As described above, the system currently implemented by Bangladesh is not in line with this standard.
In the FY19 budget, some air transport-related services were removed from exemptions.
The CAAB started taxing aeronautical and non-aeronautical charges from July 2018 and Emirates, Flydubai, Etihad and other airliners are paying accordingly.
Three of the aviation companies are not able to recover this VAT from passengers as the charge is not directly related to the passenger costs, they said.