Bangladesh Supermarket Owners’ Association has requested the National Board of Revenue to ensure uniform Value Added Tax (VAT) rate for all stores by allowing them to pay VAT at a square foot-based package rate.
They said the existing VAT system is discriminatory as customers feel discouraged from buying products from superstores as there is 2% VAT on sales of super shops while other shops pay VAT at a flat rate.
The association General Secretary Md Zakir Hossain recently sent a proposal to the NBR headquarters in this regard.
“Currently, a 2% VAT is applicable for all sales in supermarkets while many departmental stores and large shops do not collect the same amount of VAT from their clients which leads the customers to discourage from buying products from supermarkets,” Zakir said, adding that this is hampering the growth of supermarkets.
He said renowned superstores like Nandan and PQS had to keep their shutters down over the last three years due to the government’s discriminatory policies.
The number of supermarkets has come down to 96 from 105 due to the political uncertainties while many more will also be closed further.
“The supermarket business is at risk as the supermarket authorities have to pay 70 times higher taxes than those by the departmental stores,” he said.
The representative, however, said they can pay VAT at a rate of 1% for supermarkets but for others, there should be package VAT system.
Currently, 2% VAT is applicable on sales of supermarkets like Agora, Shwapno and Meena Bazar while other shops including large ones and departmental stores enjoy package VAT facility under which shop owners pay VAT annually ranging from Tk3,000 to Tk12,000 based on their shops’ locations and sizes.
The association also demanded that NBR reduce duties on necessary capital machinery like electronic shelf, refrigerator, refrigerated van, Point of Sales machines etc as the higher tax is imposed on the products, which is 65% in an average.
Currently, supermarket owners are paying the highest 107.35% duty on cooling products like vegetable freezer, fruits freezer, ice machine, fish freezer, dairy freezer etc.
The association also demanded that the board reduce the duty imposed on the import of refrigerated vans, which are used to transport perishable goods like vegetables.
“We have to face around 30% wastage while transporting vegetables from rural areas to Dhaka. If the refrigerated vans are allowed to import with benefits, we can provide fresh vegetables to the clients in a cost-effective manner,” said Jakir Hossain.
The association’s other demands include withdrawal of 0.30% turnover tax and 9% VAT on shop rent in supermarkets.