DFIM Circular Letter No. 06: Deduction of 15% VAT on the honorarium to Directors for attending board meeting

DFIM Circular Letter No. 06 Date: 31 March, 2014 17 Chaitra, 1420

To, Chief Executive / Managing Directors, All Financial Institutions operating in Bangladesh.

Dear Sir, Deduction of 15% VAT on the honorarium to members attending Board Meetings.

In this regard, the file number 08.01.0000.068.22.018.12/107(6) dated 27 February 2014 of the National Board of Revenue is reproduced below verbatim. You are advised to follow the instructions contained in the said file and ensure its compliance.

Yours faithfully, (Md. Shah Alam) General Manager Phone: 9530178.

Department: Finance, Insurance & Market Department Bangladesh Bank Head Office Dhaka.

Government of the People's Republic of Bangladesh National Board of Revenue Rajshahi Bhavan Segunbagicha, Dhaka. [VAT Act and Rules Branch] Circular File No.-08.01.0000.068.22.018.12/107(6) Date: 27/02/2014 AD Subject: Deduction of 15% VAT on the honorarium to members attending Board Meetings.

It is informed for the information of all concerned that the National Board of Revenue has been made aware of ambiguities among officials of various offices/agencies regarding the collection of VAT on services titled "Attending Board Meeting," and it is felt that clarification is necessary on this matter.

2. According to Notification S.R.O. No.-175-Law/2011/598-VAT, dated 09 June, 2011 of the National Board of Revenue, the service "Attending Board Meeting" (Code ঝ 053.00) is defined as follows: "Attending Board Meeting means any person who attends the Board or Annual General Meeting of any Government, Semi-Government, Private (NGO), International Organization situated in Bangladesh, Autonomous Institution, Bank, Insurance or Limited Company by way of fee or honorarium." As there is no reduced base value for the aforementioned service code in S.R.O. No.-182-Law/2012/640-VAT, dated 07 June, 2012, VAT at the rate of 15% is applicable on all receipts against the said service.

3. Under Notification S.R.O. No.-183-Law/2012/641-VAT, dated 07 June, 2012, the obligation to obtain VAT registration for providers of services titled "Attending Board Meeting" has been removed.

4. According to General Order No.-25/VAT/2013, dated 06 June, 2013, deduction of VAT at source is mandatory for this service. The deducted amount must be deposited into the Government Treasury (Code No.-1/1133/Commissionerate Code/0311) within 15 days of deduction.

5. For "Attending Board Meeting" (Service Code ঝ 053.00), a copy of the treasury challan containing the deposited revenue must be sent to the local VAT office under whose jurisdiction the institution whose board meeting is being attended is located.

6. This circular is issued under the powers conferred by Rule 38 of the Value Added Tax Rules, 1991.

Signed/- (27/02/14 AD) Md. Shawkat Hossain First Secretary (VAT Policy)