Body formed to suggest changes in draft VAT law

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Doulot Akter Mala The National Board of Revenue (NBR) has formed an internal review committee to suggest changes in the draft VAT law taking into consideration the prevailing economic realities. The committee, headed by NBR member (VAT) Abdul Mannan Patowary, will scrutinise the draft VAT law. The committee is set to make a presentation on its primary review report to the NBR on October 13 next. A senior NBR official said the draft VAT law has faced several roadblocks due to stiff resistance from the business community. He said International Monetary Fund (IMF) several times suggested early introduction of a new VAT law, terming the existing one 'distorted.' The official said the government is unlikely to introduce the new VAT law soon despite repeated reminders from the development partners and efforts of the draft VAT law committee. The recommended changes might be incorporated into the existing VAT law that was framed in 1991. Earlier, the NBR had received instruction from the Prime Minister (PM) to amend the existing VAT law without replacing it with the new one. "The draft VAT law might create unrest among the business community. The government may not take the risk," the NBR official said. The internal review committee on the draft VAT law held its first meeting Wednesday. The committee will review the organogram, the VAT registration procedure and auditing procedures. "The new committee will propose introduction of a sector-wise standard auditing system to come out of the existing complicated system," the official said. Currently, NBR conducts industry-wise audit due to the absence of a standard format for auditing of a particular sector. The review committee has agreed with the recommendations of the draft VAT law including withdrawal of the package system of VAT that is considered one of the major holes in the VAT law. Another official of the VAT wing said the present VAT law could be amended in line with the current situation instead of replacing it. "It is one of the new laws compared to those of the income tax and customs laws. The income tax ordinance was framed in 1984 while the customs act in 1969. But the VAT law was framed in 1991," he added. He said the VAT wing has posted a 27 per cent growth last fiscal which proves that the existing law is working smoothly.