The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has requested the National Board of Revenue (NBR) to reduce Value Added Tax (VAT) rate to 7% from existing 15% with implementation of the new VAT law that will come into effect from July 1, 2016.
The FBCCI yesterday made the request to NBR as it found that the existing rate of 15% is too high in comparison with other countries.
“15% is very high and Bangladesh is not Malaysia, not even Thailand. The rate is 6% in Malaysia and 7.5% in Thailand. But why Bangladeshi people will pay 15% VAT?” FBCCI President Abdul Matlub Ahmad questioned.
Urging the NBR to immediately work on the VAT percentage rate, he said: “The rate should be fixed in between the rate of the two countries.”
“7% should be the fixed online tax under the VAT Online Project that will come into effect from the first day of next fiscal,” said Matlub while addressing a seminar on “Business Process of New VAT Law” at IDEB Bhaban in the city. VAT Online project of NBR organised the programme.
The parliament in 2012 passed the Value Added Tax and Supplementary Duty Act to automate the overall VAT administration to increase the revenue collection.
Following the initiative, the taxes authorities in 2013 undertook the VAT Online Project to ensure a client-friendly and a service-oriented automated system.
The NBR is scheduled to start online VAT registration from July 1, 2016 and is expected that the all procedures including registration, payment, return filing, refund, legal actions under new VAT act will go online.
The new Value-Added Tax and Supplementary Duty Act-2012 will have no provisions for package VAT or truncated value-based VAT system. With the introduction of the law, all level of business have to pay a unique and a single VAT rate at 15%.
Matlub said, “Business people want to pay tax, but they do not want to pay Tk1 as tax by paying Tk3 as cost of harassment. The online project will solve the problem.”
The FBCCI President also requested NBR to introduce training for all business people in the country on the new VAT law by joining with FBCCI.
With reference to a report by Customs, Excise and VAT commissionerate, Dhaka (South), Matlub said: “I feel very sad and ashamed to see only 9% of the registered VAT payers are paying their VAT while only 4% are paying package VAT. “Where are the rest 96%?” he questioned.
He also urged the NBR to work on settling court related cases involving Tk20,000 crore VAT claims before the VAT Online project comes into effect.
State Minister for Finance MA Mannan urged the NBR officials to work properly as the new technology, which will come into effect from next July, will earn a huge amount of revenue.
“We have taken up many ambitious projects and we need huge amount of money, but we do not want to put anyone to manage the fund,” he added.
NBR member (VAT policy) Jahangir Hossain said: “The new law has the potentiality to substantially improve the revenue collection as the law was designed with four goals- significantly support business, enhance capacity of NBR, provide environment friendly revenue administration, and increase government’s capacity to support expenditure projects.”
NBR member Md Rezaul Hasan, also the project director of VAT Online Project made a presentation on project implementation status where he said the new law would ensure online platform which will have central data processing unit, call centre and service centres, fully automated VAT administration and integration with external systems.
Describing on the progress of the project, he said online VAT registration would begin from April 2016 while VAT payers would be able to file their return and payment – and claim refund through online by August 2016.
The new system will encourage voluntary compliance, ensure paperless and online VAT system and higher revenue yield for development, he hoped.
Three presentations on overall registration process, change management and organisational reform and on VAT online processes were presented to the stakeholders at the seminar.
NBR Chairman Nojibur Rahman and NBR Senior Member Farid Uddin also addressed the seminar.
