Finance minister AHM Mustafa Kamal on Tuesday said that the much vaunted new value-added tax law would be implemented from July 1 as a ‘misunderstanding’ between the businesspeople and the tax officials about the issue was over.
The misunderstanding occurred during correspondence between the two sides over implementation of the VAT act, Kamal told reporters after a meeting held at his office at the Planning Commission in capital Dhaka.
The finance minister presided over the meeting attended by leaders of Federation of Bangladesh Chambers of Commerce and Industry and officials of National Board Revenue.
NBR chairman Md Mosharraf Hossain Bhuiyan, newly elected FBCCI president Sheikh Fazle Fahim and its outgoing president Shafiul Islam Mohiuddin attended, among others, the meeting which was convened to cool down the tension between the tax officials and the businesspeople over the implementation of the act.
FBCCI had expressed its fear that the implementation of new VAT act from next July would cause a rise in inflation that might lead to public sufferings.
NBR, however, said that the businesspeople were obstructing the implementation of the act that was kept suspended for two years since 2017 due to protests from the businesspeople against single 15 per cent rate. The act was enacted in 2012.
Kamal pointed out that the main demand by FBCCI was to show them the final products list and the rate of VAT against the products.
’But such demand is absurd,’ he said, adding that the list, part of the national budget for the upcoming fiscal year, could not be made public before it was placed before parliament.
The finance minister said the businesspeople gave up the very demand after getting assurance at the meeting that the prices of products would not increase with the implementation of the new VAT act.
Shafiul said the finance minister assured them of expanding the tax net, not the rate.
Responding to a question why they made the absurd demand for seeing the final product list, he said had they not made such demand, they might not the get the finance minister’s assurance that the tax rate would remain unchanged.
Shafiul said they wanted constitution of a committee to review the implementation of the act.
Fazle Fahim said they were convinced with the finance minister’s assurance.
Countering an allegation by the businesspeople that tax officials were not prepared to implement the new act, Mosharraf said the implementation status of the new act would be reviewed time to time.
He said the implementation of the new act would be done in phases.
Replying to a question on rates of VAT, Kamal said there would be no change to the previous decision on the issue.
At a meeting on March 31, the country’s businesspeople agreed to pay VAT at proposed multiple rates of 5, 7.5 and 10 per cent from the upcoming fiscal year.
It was also decided that current 15 per cent VAT on many imported items and sectors like telecom and tobacco would remain intact.
Kamal noted that implementation of the VAT law became imperative to increase the country’s tax-GDP ratio.
The country’s tax-GDP ratio was one of the lowest in the world and did not match with the country’s growing per capital income.