The government is planning to merge several value-added tax rates into at least two rates in the upcoming national budget for the fiscal year 2018-2019, finance ministry officials said.
They said that finance minister Abul Maal Abdul Muhith already sought a list of VAT rates for different products and calculation of VAT collected from those sectors from National Board of Revenue.
The decision may be made as part of implementation of the suspended Value-Added Tax and Supplementary Duty Act-2012 from July 2019, they added.
Generally, the applicable VAT rate is 15 per cent in the country.
But, currently, there are several other truncated VAT rates ranging from 1.5 per cent to 10 per cent for various types of goods and services.
NBR introduced the truncated VAT rates considering the impact of VAT on prices of goods and cost of livings, strength of the sectors and protection of local industries.
Muhith in a recent instruction asked NBR chairman Md Mosharraf Hossain Bhuiyan to hand him a list containing the VAT rates for different products and revenue collected from the items.
‘Currently, VAT is applicable at rates of 4 per cent, 5 per cent, 7.5 per cent, 10 per cent and 15 per cent on different types of goods. These rates can be merged into at least two rates,’ he said in a note sent to NBR chairman on April 29.
The government in the budget for last FY 2017-2018 deferred the implementation of the new 2012 VAT law following strong opposition from the business community.
Under the law, a uniform rate of VAT at 15 per cent was supposed to be introduced in the country abolishing the existing multiple rates.
Businesses opposed the move arguing that it would raise cost of living and cost of business and the small and medium businesses would not be able to survive competing with large businesses.
The government ultimately suspended implementation of the law for two years until July, 2019.
Finance minister and NBR chairman on several occasions announced that the government backtracked from introducing single VAT rate and was considering introducing more than one rates.
Muhith in the latest on May 12 at a pre-budget discussion said that there should be at least two VAT rates in the country.
NBR would work on the issue in the budget, he said at the meeting organised by Dhaka Chamber of Commerce and Industry and Daily Samakal in Dhaka.
NBR officials said that there would, for sure, be more than one VAT rates, preferably two, from July 2019 if the new VAT law was implemented.
Two VAT rates might also be introduced from next fiscal year as part of preparation for implementation of the new law, they said.
VAT wing of the NBR already sent the list and other documents as sought by the finance minister, they said.
Source: New Age.