Businesses and the government still stand in disagreement over some provisions of the new VAT law, principally a tall uniform rate of the tax at 15 per cent for all -- small kiosks or big shots.
The country's apex trade body wants pared-down multiple rates of VAT, even down to a minimal 2.0 per cent for the small fry in business.
But the National Board of Revenue (NBR) says enough has been considered for them so far and no further. The Value Added Tax (VAT) and Supplementary Duty Act-2012 is now readied to be pushed through from July 1, 2016 as per government decision.
The NBR on government side and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) thus are sticking to their respective positions on the new law.
Also, the government is going to enforce the law with an exemption ceiling of Tk 3.0 million for facilitating small businesses.
According to the new law, there will be a uniform rate of VAT at 15 per cent. However, businesses can claim credit from VAT on purchase of raw materials.
On the other side, businesses demand fixation of the VAT-exemption ceiling at Tk 3.6 million, a reduced rate of VAT for businesses who will be unable to obtain VAT credits and incorporating multiple rates of VAT instead of uniform rate.
A joint committee was formed in October 28, 2014 following instruction from Finance Minister AMA Muhith to re-examine the VAT and SD act following objection raised by the businesses.
VAT officials said almost 18 of the recommendations of the joint committee on change in the VAT rules had been approved by the government.
However, the business leaders claimed that some major points in the recommendations were not addressed.
The VAT and SD law, adopted in 2012, is going to be enforced from July this year after a four-year breathing space to allow enough time to build capacity of the NBR officials and also help businesses take preparation to adopt the new law.
NBR chairman Md Nojibur Rahman said as per direction of the finance minister the revenue board accepted some of the recommendations that are not contradictory to the international best practices.
"We are preparing a transition plan for implementation of the new VAT law," he said.
The NBR wants to go ahead with the transition by keeping friendly relations with the businesses, he added.
"NBR will have to be compliant with the legislative guidance on enforcement of the new VAT law," he added.
Manzur Ahmed, adviser of the FBCCI, said a joint committee comprising representatives of the apex chamber and the NBR made some recommendations and raised objection on some of the provisions in the new VAT law which remained ignored.
"VAT should be imposed on the value-added part of business. The new VAT law does not follow that principle," he said.
Businesses that will not be able to obtain VAT credit on purchase of raw materials should enjoy a reduced rate of VAT at 4.0 per cent, he added.
Another provision on collection of VAT from relatives of the VAT-evaders also came under protest by the FBCCI.
"Instead of package VAT, we also recommended fixing VAT at 2.0 per cent for the businesses, irrespective of turnover, especially for those who sell products without any change," he said, adding that the value tax can be applicable for the superstores too.
Mr Ahmed said unless the recommendation of the joint committee considered, the businesses would face a blow with the enforcement of the new law.
"Business process will hit a standstill and also revenue collection will be hindered if the government enforced the new VAT law without considering the joint committee recommendations," he said.
The adviser also feared resentment among the businesses with the implementation of the new VAT law sans considering the recommendations.
NBR member for VAT policy Barrister Jahangir Hossain said the NBR has made all-out effort to make businesses familiar with the positive outcome of the new law.
"The process of building awareness will continue even after enforcement of the new law," he said.
The FBCCI has sent a total of 48 recommendations on the second draft of the VAT law. Of the draft, the NBR has fully accepted 18 proposals while partially eight others, officials said.
They said the NBR could not accept the rest of the proposals as those are not consistent with the main concept of the VAT law.
Also, the board accepted four proposals of the Metropolitan Chamber of Commerce and Industry (MCCI) out of its seven.
The NBR also accepted entire proposals of two corporate houses -- Pran Group and Unilever.
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