The National Board of Revenue has eased rules on the transfer of raw materials between factories of a manufacturing company to facilitate trade and investment in the country.

The company, however, will have to pay value-added tax, which is refundable, for shifting raw materials from a factory to another factory.

Value-added tax wing of the revenue board on November 5 issued a clarification in this regard.

Officials said that the NBR took the move to facilitate trade and investment as movement of raw materials between factories of a company was a ground reality in business.

Complexities in such transfer are affecting the production process in factories of a company.

Businesses without central VAT registration number faced difficulties in transferring raw materials between his/her factories and in getting rebate as there are no provisions in the current VAT and Supplementary Duty Act-2012 and VAT and SD Rules-2016 in this regard, they said.

Companies having central registration can avail factory-to-factory transfer facility under the law and rules.

Field-level VAT officials had also raising objections over such transfer without any legal provisions, the officials added.

A number of companies, including Nasir Group of Industries Ltd and Heidelberg Cement Bangladesh Ltd, had also sought directions on the issue.

Companies could avail such transfer under the 1991 VAT law which became obsolete with the implementation of the new law in July 2019.

According to the latest NBR clarification signed by its second secretary (VAT policy) Kazi Rezaul Hassan, an investor will be allowed to transfer raw materials between factories under his or her ownership without changing the shapes, nature, characteristics and quality of raw materials.

The transfer must be completed through VAT challan 6.3 by paying 15 per cent VAT, it said.

The raw material receiving factory will have to include the raw materials in the purchase account book (form VAT-6.1).

The receiving factory will be able to get rebate on VAT paid by the sending factory upon compliance with the provisions of VAT law, it said.

The officials hoped that it would make production process of companies smooth and uninterrupted.