The ministry of finance has turned down a proposal of the IMF on issuance of a gazette notification by December outlining a timeframe for implementing the VAT Act as the move triggered a furor among business community. The firm stance of the finance ministry has been conveyed to the multilateral lending agency last week as Prime Minister Sheikh Hasina has not approved a proposal to implement the new value added tax–2012 from July 2016 as asked by the IMF, a senior finance official said.
This latest position of the government, largely to serve the interests of the business community, has made disbursement of the remaining two installments of ECF fund worth around US$ 270 million uncertain, the official added.
‘We cannot commit now through any official notice on implementing VAT act from July, 2016 as Prime Minister Sheikh Hasina did not approve the move,’ the senior finance ministry official told New Age on Wednesday.
He, however, said they had been relentlessly trying to convince the International Monetary Fund that without taking into consideration the views of the business community, no democratic government can pursue any reforms involving revenue matters.
As a pre-condition to releasing the last two installments of the extended credit facility, the IMF has asked the finance ministry to announce the revised launch date of July 2016 for the new VAT act by issuing a gazette notification, publishing the combined tender for the procurement of the software and hardware to enable introduction of new VAT mechanism and a formal approval by finance minister AMA Muhith by the end of this year.
The officials at the finance ministry said they had already asked the National Board of Revenue to ensure faster procurement of software for introducing the new VAT act. However, the government was not in a position to commit any timeframe for the VAT implementation, he added.
Meanwhile, the IMF has deferred the release of the sixth installment of US$ 1 billion loan to next year after the government failed to lay out a fresh roadmap for implementing the new VAT act, sources confirmed.
The sixth installment — around US$ 135 million — had been scheduled for release in November, officials said.
The new VAT and SD law (VAT law), passed by parliament in November 2012, is scheduled to take effect on July 1, 2015.
Under the new VAT law, existing package of VAT and truncated system of VAT and tariff value system to determine the VAT amount would no longer exist, and be replaced by uniform 15 per cent VAT.
However, small and medium enterprises with Tk 24 lakh or below annual turnover will remain out of the purview of the new VAT system.
-With New Age input
