Country's apex trade body has sought the prime minister's intervention to resolve raging tensions over the move on the part of the Ministry of Finance to enforce a new law that would levy a blanket rate of 15 per cent VAT on businesses.
The business community aired the fear of escalation in prices of products and adverse effect on small and medium enterprises if the government enforced the Value Added Tax (VAT) and Supplementary Duty Act 2012.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President, Abdul Matlub Ahmad, sounded such forewarning in a letter sent Saturday to Prime Minister Sheikh Hasina.
He regretted that the law the enforcement of which delayed deliberately was going to be pushed through without amendment following recommendations made by a joint consultative committee.
"The country's economic development might face a blow if the law is enforced without bringing necessary amendments to it. Also, some vested quarters may try to create political instability taking advantage of the agitation by small and medium businessmen over the VAT law," the letter reads.
The chief of the federative body of businesspeople pointed out that country's business community is seriously concerned about this.
A joint committee, comprising officials of the National Board of Revenue (NBR) and the FBCCI, made recommendations on January 8, 2015 after examining VAT system across the world. It has placed seven-point recommendation which still awaits implementation.
The committee recommendations include raising VAT-free turnover ceiling to Tk 3.6 million, fixing VAT rate at 3.0 per cent for turnover up to Tk 15 million, setting VAT at 4.0 per cent for traders who are unable to obtain rebate and at 2.0 per cent for those who sell products at fixed rates.
"It is important to implement the recommendations of the joint committee in national interest," the FBCCI said.
Its latest move came as the budgeting process is culminating into its final stages for presentation of the fiscal 2016-17 budget in parliament on June 02. And with the passage of the budget, the VAT law will also take effect from July 01 simultaneously with the new budget.
The Federation has long been requesting the government to make necessary amendments to the new VAT law following the recommendations but to no positive response yet, it said.
VAT should be imposed as per section 31 and 32 of the VAT law 2012 under which 15 per cent VAT is proposed on specific value-added portion to maintain and expand continuity of credit chain, spread VAT network and collect increased amount of revenue.
Earlier, the FBCCI had written another letter to the PM on April 24 with the similar request.
The chamber also sent letters to the commerce minister on April 28, 2016, the NBR chairman on May 4, 2016 and the finance minister on May 8, 2016, requesting them to take step to amend the VAT law in line with the recommendations from the joint committee.
UNB adds: Commerce Minister Tofail Ahmed speaking at a seminar Sunday said the government would not impose 15 per cent Value Added Tax (VAT) on businessmen at a time.
"Both the finance minister and me had held several meetings with the businessmen about the implementation of the VAT law. We wouldn't do anything that obstructs investment. We are cautious about the implementation of the new VAT law," he said
The minister was addressing a seminar titled "Bangladesh is on the highway of development under the leadership of Sheikh Hasina" organised by Awami League sub-committee on Publicity and Publication held at Institute of Engineers in the city.
Tofail Ahmed said "The government will take time, if needed, it would not impose 15 per cent VAT on businessmen at a time."
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