NBR finalises initial draft of VAT rules

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Doulot Akter Mala The National Board of Revenue (NBR) has finalised the initial draft of Value Added Tax (VAT) rules by incorporating details of online payment of tax and VAT registration system. The draft rules also include measures to encourage both businesses and consumers for payment of VAT and to take invoices after purchasing goods. The NBR sent the initial draft of VAT rules Wednesday to all the stakeholders seeking their opinion within October 10. Both taxmen and taxpayers will have to follow the new guideline from July, 2015 after the enactment of the new VAT and Supplementary Law. Team leader of the VAT rules drafting committee of NBR Md Zakir Hossain said the new VAT rules will encourage businesses to seek any services, submit VAT returns and seek refunds online. "According to the draft rules, businesses will get Business Identification Number (BIN) within two days of their online application. In case of manual application, it would require four days to issue a BIN," he said. The same rules will be applicable in getting refunds, he added. VAT payers will get tax refunds within 15 days through online application which would need two months in manual system, Mr Hossain said. Executive Director of Policy Research Institute (PRI) Dr Ahsan H Mansur, said the new VAT law aims to bring personal contact between taxmen and taxpayers to "zero level." Submission of VAT returns and payment will be done online, he added. He said draft rules will be changed and made friendlier in line with the opinions given by cross section of people. The draft rules kept a provision of honour card for VAT payers who will submit VAT returns regularly, Mr Hossain said. Consumers will also get rewards by sending his/her invoice number of any goods purchased, through SMS (short message service), he added. Regarding implementation of VAT law from 2015, Mr Hossain said the NBR is prepared with its VAT rules but it needs World Bank's (WB's) fund support to proceed further. The rules have reduced the long list of documents required to get BIN. Businessmen have to submit eight types of documents at the time of submission of application for BIN that includes Taxpayers Identification Number (TIN) certificate, National Identity Card number, lien bank account number etc. There is also a provision for 'VAT agent' which any expatriate can appoint to deal with the VAT authorities on his behalf. Tourists will get refund for the tax he or she has paid on products purchased upon fulfillment of some conditions. The new law will focus on "regularisation" of the submission of VAT returns. Currently, less than 50,000 BIN holders submit returns out of 7,00,000. This irregularity is only because of the faulty 'account current system' under which taxmen collect advance VAT from the large corporate houses. Dr Mansur said the tax return will be the source of revenue earning after implementation of the new VAT law. Existing 'account current system' will not exist after introducing the new law, he added. "Initially, the VAT collection will face a shortfall as the taxmen used to collect a big chunk of advance amount from the businesses under the system. But it will be made up within a year," he added. Tax officials expect that all stakeholders will give their opinion on the VAT. The draft rules are also available on the website www.nbr.gov.bd.