Govt to introduce flat rate of VAT on sale of jewelleries

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FE Report
The government is going to introduce flat truncated rate of Value Added Tax (VAT) on sale of gold and silver jewelleries following appeal of the traders.
The National Board of Revenue (NBR) is planning to introduce the VAT at 1.5 per cent on the total value of jewelleries instead of existing 15 per cent on making charge, profit, fee and commission.
A high-powered NBR committee, comprising tax officials of Dhaka south and north, has recommended the new tax rate in line with the plea of the Bangladesh Jewellers' Samity (BJS).
The NBR has prepared a proposal on the change in the VAT rate, which is now awaiting finance adviser's approval, officials said.
There are differences in opinion between the revenue officials and gold traders over the current rate of VAT.
An NBR team launched a crackdown in some renowned gold outlets of the city last month following incidences of tax evasion.
The gold jewellers have been demanding a specific government policy on collection of VAT from the traders. They claimed the revenue board is increasing VAT phase by phase.
On the contrary, the tax officials said, there is no tax on gold or silver prices. Tax is only imposed at 15 per cent on making charge, commission, fee or profit.
An NBR official said: "Some of the gold traders have been evading VAT by showing false invoices to hide information on actual sales."
In 2007-08, only Tk 48 million worth of VAT was collected from the sector, which is not satisfactory, compared to the annual turnover of the business, he said.
Gold traders said VAT collection method of the revenue board is complex. They said the system should be uniform and simple to collect due VAT from traders.
In 2004-05, the NBR imposed 15 per cent VAT on making charge, commission/fee and profit instead of the making charge only.
Since then, the BJS has been demanding for reintroduction of 15 per cent VAT only on the making charge or 1.5 per cent on the total value/sale to save this oldest industry.
Besides, in the current fiscal budget, the NBR relaxed some rules to facilitate the gold and silver traders.
A passenger is now allowed to duty-free import of 200 grams of gold or silver jewellery under baggage rule.
For importing gold or silver bullions, a person will have to pay only Tk 150 and Tk 6.0 per bhori respectively.