FT Online

Published:
2019-05-12 10:29:09 BdST

New VAT law: FBCCI blamed for holding up implementation


The National Board of Revenue (NBR) has alleged the apex chamber body is trying to impede the implementation of new VAT law once again.

After a delay of two years, the new VAT and Supplementary Duty Act-2012 is scheduled to come into force from July 1, replacing the existing law framed in 1991.

"… the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) is trying to create obstacles again to the implementation of the new Value Added Tax (VAT) and Supplementary Duty Act-2012," said an NBR letter.

The FBCCI said it is not against the new law, but wants to get some issues clarified.

In the letter to the apex chamber body, the NBR said that it has already prepared the proposed amendments to the law and the rules in line with the recommendations of the meeting held between the apex trade body and the tax authority on March 31.

The revenue board has adequate preparations for presenting the New VAT and SD Act-2012 and VAT and SD rule-2016 in the upcoming budget, according to the letter.

The VAT wing of the board has addressed all the objections of the business community regarding the new VAT law.

The NBR stated these in the letter, signed by second secretary (VAT policy) Tariq Hassan, responding to the FBCCI's allegations regarding the new VAT law.

The government deferred the implementation of the new VAT law by two years in 2017 following protests from the business community.

Last week, the FBCCI sent a letter to the NBR chairman making allegations such as of skipping a scheduled meeting on the new VAT law, not conducting impact assessment as per the suggestions of the trade body and ignoring proposals made in previous meetings.

It argued the law is 'not ready' for execution.

The NBR said conducting an impact assessment cannot be a pre-condition to replacing the existing tax collection process by the new one.

In the coordination meeting, the businesses, in principle, agreed to the NBR's proposed measures, including an upward adjustment of the VAT-free limit to Tk 5.0 million from Tk 3.0 million, raising the ceiling for turnover tax to Tk 30 million from Tk 8.0 million, and increasing the turnover tax rate to 4.0 per cent from 3.0 per cent.

According to the proposals, there will be four rates of VAT in the new law--5, 0, 7.5, 10 and 15 per cent.

In the meeting, the apex chamber was positive about the implementation of the new VAT law, the NBR said.

Responding to the FBCCI's allegation about skipping the meeting on May 2, 2019, the NBR said a representative of the trade body requested the board to re-schedule the meeting after talking with someone over phone.

"It is disappointing that the FBCCI is raising such allegations of not holding meeting despite being served with meeting notices," it added.

According to the presence sheet of the meeting, four of the FBCCI representatives attended the meeting on that day.

On November 11, 2018, the NBR formed a high-powered committee to review the new VAT law considering different analyses by the business communities.

The board sent the recommendations of the committee to the FBCCI. The chamber has not made its opinion known on the report yet.

On different occasions, the FBCCI praised the recommendations of that committee, the NBR letter said.

But the NBR said such a letter from the FBCCI is "disappointing."

The NBR said the new VAT law has a number of provisions, which will facilitate business and increase revenue collection.

It said the board will conduct an impact assessment on the law after the budget to meet its own needs.

The board had approached seven to eight specialised institutions, including Development Studies Department of the Dhaka University, the Center for Policy Dialogue (CPD), Bangladesh Institute of Development Studies (BIDS) and BRAC University, to conduct the impact assessment of the law.

But the NBR could not get positive response from the institutions.

The NBR said it always values the opinions of the business community during the budget preparation.

FBCCI taxation subcommittee convener Humayun Kabir said the trade body is not against the new VAT law, but it wants to get some clarifications.

"Such amisunderstanding between the NBR and FBCCI is unwanted," he added.

He said the mutual trust and understanding are required for successful implementation of the new VAT law.

"Both the parties reached consensus over some issues regarding the law which should remain in place," he added.

Meanwhile, finance minister AHM Mustafa Kamal confirmed Saturday the government would start implementing the new VAT law from July.

He told reporters the implementation of VAT is a continuous process.

The minister declined to comment on lack of preparedness of the government as claimed by the trade group.

"We are bringing changes, including the introduction of multiple VAT rates, to the law as per demand of the business community," he said.

He also said that the FBCCI in the past did not let the NBR implement the law, but this year the government is determined to implement the law through the budget.

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