Finance Minister A H M Mustafa Kamal said on Thursday there will be no 15 per cent VAT (value added tax) rate as it prevails now.
This rate will be discontinued from July next while introducing the new VAT and Supplementary Duty act.
"No 15 per cent VAT rate will exist," the minister said.
He said from the next fiscal year, there will be three VAT rates-5.0 per cent, 7.0 per cent and 10 per cent.
Mr Kamal shared the plan with reporters after a pre-budget meeting with heads of parliamentary standing committees at the NEC conference room in the capital.
He said there will be no single rate; rather multiple rates will be introduced.
Under a condition of the International Monetary Fund (IMF) the government passed the new VAT and Supplementary Duty act in 2012 to get US$1.0 billion budgetary support. The main feature of the new act was the introduction of a 15 per cent flat rate of VAT.
However, the government could not enforce the new act in the face of protests from the business community and politicians.
Businesses had been saying that the new VAT rate will be burdensome for consumers and traders would not be able to realise 15 per cent VAT from them.
Mr Kamal also said the government now plans to engage the private sector asset management companies to help recover non-performing loans (NPLs).
"The banks will try to recover the NPLs. If they fail, we will engage the asset management companies to recover those," he said.
Referring to his discussion with the standing committee chairmen, Mr Kamal said the enlistment of the educational institution for MPO (monthly pay order) will start from the next fiscal year again.
In the next three years, a good number of educational institutions will be enlisted for the MPO in phases, he said.
"We have asked the line ministry to provide a list of educational institutions after proper checking, which are eligible for the facility," the minister said.
He also said steps have been taken for product diversification to raise export.
In this respect, the minister said he will reshuffle the cash incentives criteria. Products with similar value addition will get the same rate of cash incentives, he said.
The minister said tax net has to be further expanded for raising revenue collection. Many eligible persons do not pay income tax, he said.
The minister said in Bangladesh the rate of corporate tax is high."We will check how much it can be lowered,"
He said mega projects are yet to be completed. "We need to generate revenue for implementing those," Mr Kamal said.
Meanwhile, speaking at the annual conference of the state-owned Agrani Bank on the day, the finance minister has once again spotlighted the deep trouble the country's banking and financial sector is in now.
"The banking and financial sector is in danger. There are reasons to be worried. It's a matter of apprehension," he mentioned.
He said the government was planning to formulate an insolvency act to recover non-performing loans (NPLs).
"There is no country which doesn't have an insolvency act. We should place the insolvency act in parliament as soon as possible," he added.
Bangladesh lagged behind for systemic losses like not having an insolvency act in place, Mr Kamal said.
He spoke of taking steps immediately for ensuring vibrancy in the bond market.
"Initially, we'll let Pran Group float a bond," he said, referring to his receipt of a request to this end.
"I've already talked to the Bangladesh Bank governor in this regard, Mr Kamal continued.
"We haven't yet introduced many financial tools in the market. If we don't float new tools, we won't be able to reach our destination."
The minister said banks accept short-term deposits but disburse long-term loans.
"I don't understand how they would survive with this policy," he pondered.
Mr Kamal said bad loans would not rise a single bit from now on. "If NPLs drop, spread rate will fall subsequently and interest rate will come down to a single digit."
Multiple rates of VAT (Value Added Tax) would be followed this year, not a single rate, he mentioned.
"The tax and VAT rates will also be lower," he said.
Mr Kamal said he would take steps this year to stop the tradition of tax evasion.
"Many people don't pay tax. I'll take measures so they start paying taxes from this year," he mentioned.
Speaking at the programme, Bangladesh Bank Governor Fazle Kabir said Agrani Bank had good records.
"But they still have to meet the capital shortfall and lower the current level of NPLs further," he added.
Mr Kabir called upon the bank to disburse 20 per cent of its total loans to cottage, small and medium enterprises.
At the event, Agrani Bank honoured its 15 clients, including Apex Group, Bashundhara Group and PHP Group.
Zaid Bakht, chairman of Agrani Bank, said a special and dedicated bench of the High Court could ease the lingering process of disposing of default loan cases.
He identified three challenges for banks now: collecting deposits at low rate, disbursing loans for investment at low rate and ensuring flow of foreign currency for investment.
Financial Institutions Division Secretary Md Asadul Islam and Agrani Bank Managing Director Shamsul Islam also spoke at the programme.
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