Businesses against criminal provisions in VAT act

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unit Barrister Jahangir Hossain, professor of Lund University Dr Ben Terra presented key note papers on the issue. Addressing the meeting, NBR chief Nasiruddin Ahmed said they would not propose enactment of any law incorporating criminal provisions in it. The proposed VAT act will be more liberal in terms of imposing penal charges, NBR chief added. He said his office will not bow down to any pressures from the World Bank and IMF (International Monetary Fund) while finalising the draft of the act. "We've to mobilise resources from the domestic sources, then why will we bow down to foreign pressures?" he asked. He said the NBR is working to mobilise internal resources and thus cut dependence on World Bank and other donor agencies. He said: "We want a win-win situation while preparing the proposed act" NBR chief who sought chapter-wise suggestions from the FBCCI said: "We should work together to make it more business and tax friendly." "We need more inputs for the proposed act and we need assistance form the business circles," he added. He said: "We'll give you a modality and you will contribute to enrich the act." Mr Nasir said the proposed VAT act will take adequate care of the small and cottage industries. "We've planned to incorporate a second threshold for the small business houses," Mr Nasir who is also in-charge of internal resources division added. He said impact assessment should be conducted to prepare the proposed act. Mr Nasir stressed the need for automation of all tax offices to ensure efficient tax services. He said the tax office lacks skilled manpower for long due to legal complexities to appoint new personnel. "We've already recruited 90 assistant revenue officers. I think this will help improve the situation." PRI Executive chairman Ahsan H Mansur said the current trend of growth in the VAT mobilisation must be ensured for the next 20 years. We need a big reform in the tax system to retain the present growth trend in VAT", he added. He said Bangladesh is the worst performer in case of tax-GDP ratio in the region. "Our tax-GDP ratio is simply over 9 per cent. This the worst in the region," Mr Mansur added. He said, "we must attain 13 per cent tax-GDP ratio as per the fifth five year plan". He observed that less than one per cent of the total population is paying taxes. Mr Mansur said it is necessary for improvement of tax payers' services. He said electronic filing of tax returns and automation are designed to improve the services. He said: "We need a good VAT act as a good act can ensure good mobilisation of taxes." Mr Mansur said over Tk 200 billion now remain pending due to filing of cases by tax payers and the NBR. "We should release such big amount immediately through alternative dispute arrangement," Mr Mansur added. Addressing the meeting, FBCCI vice president Mustafa Azad Chowdhury Babu said the NBR should prepare the proposed act after thorough discussions at seven divisional levels. Mr Babu said the VAT act should be made simple. "We need a core group for analyzing each provision of draft act and make it efficiently," Mr Babu added. He said the criminal provisions in the draft act should be scrapped. "Awarding imprisonment or imposing tough penalties will not ensure sound earnings of VAT by the NBR," he hinted. Mr Babu also stressed the need for enhancing public services throughout the country. "We're paying taxes and VAT, but in exchange of this, we're not getting proper services," he added. Mr Babu said the communications network has failed. "We need at least 12 hours to go to Chittagong against six hours earlier," he added. Addressing the meeting, FBCCI acting president Md Jashim Uddin alleged that many business firms are paying double taxes due to the existing act. "Small business firms who cannot import directly and buy from the importers, have been paying double taxes," he added. Mr Jashim said the new act will remove many such hurdles. He urged the NBR to refrain from formulating VAT act by copying acts of developed nations. "You will not enact such a law which we will not be able to abide by," Mr Jashim added. Referring to the proposed VAT act, commissioner of large tax payers unit of the NBR Barrister Jahangir Hossain said the new act will reduce the cost of doing business in the country. "It will be a hassle-free and tax friendly," he claimed. Mr Jahangir said business firms will require only one registration despite the fact that they may have separate factories across the country. Currently, business firms need separate VAT registrations for their different plants. He also said transfer of raw materials from one factory to another factory under the same entrepreneur will not require to pay 1. 5 per cent taxes now. Mr Jahangir said business houses will be able to announce discounts they wish which are barred in the existing VAT act. He said the new act will ensure the competitive edge. He said: "We want the provisions of tax exemption in the tax system." Citing a study conducted by IMF, Mr Jahangir said actually exemption goes to the influential people. Professor Ben Terra said VAT is as interesting as a new execution techniques for somebody waiting in death-row. He said VAT should be clear, simple and having single rates. He said VAT is self policing and clear audit-trail. Amin Hossain Khan, president of Bangladesh Dokan Malik Somity said there is no necessity of new act. "Rather you should amend the existing VAT act." He said nobody can realise taxes forcibly. "You can't force me to pray five-times a day, showing the extreme punishment of hell." "The punishment provisions should go from the proposed VAT act," Mr Khan who is also a member of FBCCI standing committee on VAT and taxes, said. He said participation system should be re-introduced to make VAT act more friendly. He said parliament should pass the main VAT act. "We all should be included while preparing rules of the act." FBCCI director Abdul Hoque said the small business house should be kept outside from the VAT. Former FBCCI adviser Manjur Ahmed alleged that the World Bank and IMF are giving misleading idea about our tax-GDP ratio. "Our ratio is over 12 per cent on 80 per cent productions. We have excluded agriculture form the tax system," he claimed. He said NBR should begin from bottom lines to know the real situation of small and cottages firms. General secretary of Bangladesh Re-rolling Mills, Abu Bakar said the rate of VAT should be fixed at 10 per cent. A director of Bangladesh Chamber of Industries Priti Chakrabarti said the VAT act should be made very easy so that entrepreneurs and VAT officials understand it clearly. Referring to NBR she said, "You are giving examples of developed nations, but You should know what benefits they are getting from the governments to produce their products." A former NBR official Shahab Uddin said penalty must be made more liberal. The former NBR member said the proposed law has been converted into Bengali. "But there is still some issues to make it more clear." Shahidul Islam Milon, a representative of Jessore Chamber of Commerce and industry said the scope of VAT should be widened further. Habibur Rahman Raja of Rangpur Chamber of commerce and Industry said distributors have been facing serious harassment by the revenue officers. Shafiqul Alam Bhuiyan, managing director of Monico Ltd and representative of Bangladesh Association of Construction Industry, Abdul Waded of Chapainawabganj Chamber of Commerce and Industry, Enayet Ullah of BCI, Abdus Salam of Dhaka chamber of Commerce and Industry, Shahidul Hoque of Bangladesh Indenting Agencies also addressed the meeting.