The process of implementing the new VAT law from 2015 is facing difficulties due to a delay in disbursement of necessary funds for a relevant project.
The VAT and Supplementary Duty Automation Project, approved on October 8 last, still did not get any fund from the government for it, though it was necessary for implementing the law.
Officials said a bureaucratic tangle caused the delay in disbursement of the fund to tune of Tk 470 million pledged for the project in the current fiscal year.
The delay in fund disbursement was causing hindrances to procurement of materials and having an office space for the project, said a senior VAT official. It was not possible to bear the project expenditure from the VAT officials' own pockets, he added.
"The pace of the project largely depends on successful implementation of the new VAT law from 2015," he said.
The government launched the VAT automation project nearly five months ago in October last year and it will run until 2018.
An integrated VAT administration system will be introduced under the project facilitating issuance of online BIN and helping businessmen submit tax returns online.
The National Board of Revenue (NBR) already invited tenders twice for selecting software firms for operating the automated VAT system.
The official said there would be a call centre for businesses seeking assistance from taxmen. The telephone number for it would be toll-free for the VAT payers.
A central processing centre would also be established at the NBR to maintain inter-connectivity with the tax offices and tax payers, he said.
The NBR framed the new VAT and SD law based as per recommendations of the International Monetary Fund (IMF). The IMF tagged the condition of implementing the new VAT law with the disbursement of a fund under the IMF's Extended Credit Facility (ECF).
On enforcement of the new law, the manual VAT collection system will be replaced by a digital one.
According to experts, the existing VAT collection system sees distortions in several exemptions for businesses. The law will help plug the existing loopholes in VAT collection.
Officials said a similar project for income tax automation recently received funding support of the government while disbursement of the fund for the VAT wing was caught in the bureaucratic tangle.
They said the other procedures related to implementation of the law from 2015 were progressing quite smoothly.
The government should expedite disbursement of the fund for the project to speed up the implementation process of the new VAT law.
