The government is finally going to implement much-talked-about ‘Value Added Tax (VAT) and Supplementary Duty Act 2012’ from July 1, with four slabs including the existing 15%.
Apart from the standard VAT rate, there will be three different VAT rates like 10%, 7.5% and 5% rate for specific goods and services.
The government enacted the law seven years ago but had to retract its implementation amid protests from business community several times demanding some reforms.
“We are going to implement our long-awaited Value Added Tax Act, 2012 from the coming fiscal year (2019-20),” said Finance Minister AHM Mustafa Kamal while placing the national budget before parliament on Thursday.
“To ensure effective implementation of this Act, we will provide all types of logistical support including necessary manpower,” he added.
Kamal informed that a joint working group, comprising officials from the government and private sectors, will oversee the implementation of the new law.
The draft budget excluded traders having annual turnover up to Tk50 lakh from the VAT net and proposed 4% turnover tax for the small traders having turnover up to Tk3,00,00,000.
The VAT registration threshold will be Tk3 crore, which was Tk80 lakh earlier.
Local traders have to pay 5%, while some other business will pay 10%, and 7.5%, said the draft budget.
The minister proposed to continue existing VAT and supplementary duty exemptions given to the heavy industries like automobiles, refrigerators, freezers, air conditioners, motorcycles, mobile industries for the growth and development of heavy domestic industry and export sector.
The exemptions further extends to the Rooppur Nuclear Power Plant project on the procurement of services from freight forwarders, clearing and forwarding agencies, insurance companies, suppliers and banking services.
However, products, which were out of net, such as plastic and aluminum items, soybean oil, palm oil, sunflower oil, mustard oil will be brought under the VAT net, said the draft budget.
The finance minister also proposed VAT on astrologists, marriage media services and on the supply of entertainment programs, serials, drama and tele-films to be broadcast on television channels and online media such as YouTube and Facebook.
“In addition, I am also proposing to impose VAT at the import stage on telecom equipment as they have been enjoying exemptions for a long time,” added Kamal.
Read the full budget speech for FY20 here.
