Businesses decry AT on raw materials import

Businesses on Saturday demanded the authorities exempt advance tax (AT) from the import of raw materials and offer rebate facility for all rates of Value Added Tax (VAT).

There are four key VAT rates such as 5, 7.5, 10 and 15, but businesses can only enjoy the rebate on raw materials if they pay the consumption tax at a rate of 15 per cent.

President of the Dhaka Chamber of Commerce and Industry (DCCI) Osama Taseer placed the demands at a workshop on "Raising awareness of VAT and Supplementary Duty Act-2012."

The DCCI organised the workshop at CIRDAP auditorium in the city.

He sought the introduction of online tax returns and VAT exemption from life-saving drugs.

While inaugurating the workshop, chairman of the National Board of Revenue (NBR) Md Mosharraf Hossain Bhuiyan said businesses in connivance with a section of corrupt tax officials evade VAT.

He urged the businesses not to evade VAT to avoid harassment.

He also said the character of the revenue collecting officials has to be changed.

"I have got a number of leave applications of the officials for performing the holy Hajj, but it would be useless unless officials changed their character," he said.

Responding to the queries of the businesses, the NBR chief said the tax collector has made VAT registration mandatory for some sectors, irrespective of their turnover, to stop the abuse of the existing provisions.

Under the new VAT law, effective from July, 01, 2019, small businesses having an annual turnover below Tk 5.0 million will enjoy waiver. Also, there is a provision for the payment of VAT at a lower rate of 4.0 per cent for the businesses having turnover between Tk 5.0 million to Tk 30 million.

The NBR chairman said small grocery shops in the locality are eligible to enjoy this lower rate and VAT exemption.

"We have found that some businesses, which are already VAT registered, claiming themselves to be VAT exempted," he added.

"The businesses will have to calculate their profit excluding VAT as prices of products are VAT inclusive," he added.

The NBR chief said there are around 40 million people involved in different businesses, but only 2.0 million people submit income tax returns.

In Bangladesh, tax collection ratio from businesses is poor compared to other countries in the region, he added.

He said the government has kept the multiple rates of VAT following suggestions from the businesses.

The NBR chief said the revenue board lagged behind its tax collection target for the just-concluded fiscal year (FY).

Tax collection will be below Tk 2.30 trillion against its target for Tk 2.80 trillion in FY 2018-19.

NBR member (VAT implementation and IT) Shahnaj Parveen, said the VAT wing contributes a major share to the revenue collection.

Including VAT at import-stage, the wing generates 50 per cent of the total revenue collection of the NBR, she said.

Abdus Salam, business leader from old part of Dhaka, said some 55,000 businesses in that jurisdiction used to pay package VAT.

It would need some time to be accustomed to the provisions of the new law, he said.

"We expect flexible attitude of the VAT officials and hassle-free environment for the enforcement of new law," he added.

DCCI leader Syful Islam proposed the use of mobile-based applications and focus on e-commerce.

In the workshop, businesses alleged the extortion by police in the name of checking papers of VAT.

In response, the NBR chairman said it is fault of the police department if businesses pay illegal tolls during the transportation of goods.

An official can ask for the invoice because the display of VAT chalan is mandatory by law, he added.

The NBR chairman suggested that the businesses maintain necessary documents to get refund of the paid VAT as advance tax at the import stage.

"We have introduced the AT to ensure transparency in VAT and income tax collection system," he added.

VAT Online project's deputy head Zakir Hossain discussed on "Changes in new VAT and SD act and its implementation on business."

Snehasish Barua, tax consultant of the DCCI, discussed on the implementation procedures of VAT and VAT form fill-up.

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