Bangladesh’s National Board of Revenue (NBR) is considering abolishing the manual value-added tax refund mechanism used by leather and jute exporters, opting instead to route all claims through its automated e-VAT platform in a move officials say will tighten oversight and unclog a backlog of pending payments.
The proposal, outlined in an internal note dated July 7 from the VAT Implementation Wing, calls for cancelling a General Order under the VAT Act that currently permits refunds on raw materials used in jute and leather goods to be processed manually through the Duty Exemption and Drawback Office, known as DEDO. The note was forwarded to the VAT Policy Wing for review. Read Here
According to the document, exporters are already receiving a share of their refunds through the online e-VAT system, where claims are settled automatically using e-Challan records and data drawn from individual VAT commissionerates. Officials involved in drafting the proposal said running two parallel refund channels, one manual and one digital, has made it harder to verify claims and has left the revenue board exposed to potential losses.
Under the plan, exporters would submit and receive refunds solely through their respective VAT commissionerates, with the automated system cross-checking submissions against tax data before releasing payment. The internal note, signed by NBR Member for VAT Implementation and IT Syed Mushfequr Rahman, recommends that the board consult trade bodies representing the jute and leather industries before finalising the change.
Rahman told reporters the goal is to route every refund through VAT returns filed in the e-VAT system, with approved payments deposited directly into claimants’ bank accounts via the IBAS++ platform. He said the redesign would remove the need for exporters to visit tax offices in person to pursue claims.
He added that VAT returns are filed with VAT circles rather than with DEDO, meaning refunds tied to those returns are more logically processed by the commissionerates themselves. DEDO, he said, would continue handling refunds of customs duty and regulatory duty manually until that side of the system is digitised under the NBR’s Strengthening Revenue Mobilisation Project.
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A senior customs official said the shift also reflects legal friction between the VAT Act and the VAT Rules, which has complicated DEDO’s ability to process VAT-linked claims since the office lacks direct access to exporters’ VAT returns.
If adopted, the change would unwind a special manual refund arrangement that has been in place since March 2023, making the e-VAT platform the only channel through which jute and leather exporters can claim VAT refunds.
Reza-e-Azam, Secretary General of the Bangladesh Jute Spinners Association, said many jute exporters have refund claims that have been pending for an extended period. Because jute exporters are exempt from paying VAT, he said, a large number failed to file the nil VAT returns required to process those claims under the current system.
Azam asked that the NBR allow exporters to settle their existing backlog through DEDO before the transition to a fully automated system takes effect, which he expects from later in 2026. He nonetheless welcomed the broader shift, saying it should cut down on physical visits to tax offices and speed up the release of funds owed to exporters.
The NBR has not yet compiled a total figure for outstanding VAT refund claims in the jute and leather sectors, according to the note, and officials said that tally remains a prerequisite before any final decision is made public. Officials are expected to begin reconciling pending claims in the coming weeks, ahead of consultations with trade bodies.
The proposal forms part of a wider push by the revenue board to digitise VAT administration, reduce manual intervention in tax processes, and strengthen scrutiny of refund claims across export-oriented industries. Trade analysts say exporters in both sectors have long flagged delays in the manual DEDO process as a drag on cash flow, and a fully automated channel could ease some of that pressure once a clear transition plan for the existing backlog is in place.