VAT-free turnover limit proposed to Tk 36 lakh
The VAT act review committee formed by the National Board of Revenue has recommended that the government should introduce a multiple value-added tax rate instead of the 15 per cent single rate for all sectors incorporated in the new law, officials told New Age on Monday.
In its recommendations, the committee consisting of representatives of the revenue board and the Federation of Bangladesh Chambers of Commerce and Industry said that the VAT rate should be reduced as the existing economic structure in the country has no ability to bear the burden of 15 per cent VAT in all sectors, they said.
According to the VAT and Supplementary Duty Act-2012, a single VAT rate at 15 per cent will be imposed on all businesses having a turnover above Tk 80 lakh.
The committee, headed by former NBR member Ali Ahmed, also suggested in its report submitted to the finance minister Abul Maal Abdul Muhith on Sunday for increasing the VAT-free turnover threshold for businesses to Tk 36 lakh from the current Tk 24 lakh to facilitate small businesses from production, trading and services sectors.
It also said that the upper limit of transaction for imposing turnover tax should be increased to Tk 1.50 crore from the current Tk 80 lakh and set turnover tax at 3 per cent. They, however, will not allow to avail tax rebate that they paid in advance.
‘The committee recommended for introduction of reduced VAT rate for those business people who will not be able to avail input tax credits,’ a member of the committee told New Age.
Availing input tax credits is quite impossible for many businesses that buy raw materials from local market as many of the suppliers do not provide VAT challan which is important for availing input tax credits, he said.
On the other hand, VAT should be at reduced rate for many sectors such as essential goods, utility distribution and construction as the burden of the 15 per cent VAT will fall directly on ordinary consumers.
The committee also proposed for imposition of 2 per cent turnover VAT at business stage with annual turnover above Tk 36 lakh for ensuring compliance and avoiding complexities in VAT collection, he said.
The revenue board formed the committee on October 24, 2014 following a directive of finance minister Abul Maal Abdul Muhith to review the VAT and Supplementary Duty Act approved by the parliament on November 27, 2012.
The law was supposed to come into effect from July 1 this year but the revenue board extended the deadline by a year to July 2016 amid opposition from business community over some provisions of the law mainly introduction of 15 per cent unified VAT rate and abolition of package and truncated value-based VAT rates.
On the other hand, the government remained under pressure from the International Monetary Fund for early implementation of the law as a condition for releasing the sixth installment of its US$ 1 billion Extended Credit Facility loan.
In this context, the government took the move to review the law.
Officials said that the government might bring amendments to the law to incorporate the recommendations.
Representatives from the revenue board and the FBCCI, however, expressed different views on five provisions of the law including making the relatives of tax defaulters responsible to recover unpaid VAT, power of VAT officials to freeze bank accounts of tax defaulters and government’s authority to confiscate movable assets of tax defaulters.
On freezing bank accounts and seizure of properties, FBCCI said such steps should be avoided until the court accused the taxpayers for the irregularities. However, NBR officials supported the provision as existing VAT, customs and income tax law still have the measure.
-With New Age input
