IMF experts to assist operationalisation of proposed VAT law
Doulot Akter Mala | Sunday, 20 March 2011
Doulot Akter Mala
Experts of International Monetary Fund (IMF) in administrative affairs of Value Added Tax (VAT) will set the implementation strategies of the proposed VAT law, in consultation with their local counterparts, to make it business friendly. A mission of the multilateral capital donor is scheduled to visit the country next month to discuss the implementation strategies for the draft of the new law that is expected to be enforced from fiscal 2012-13. The IMF team is scheduled to arrive in the country on April 17 next to set an action plan on the legal reform of VAT administration, said National Board of Revenue (NBR) Chairman Dr Nasiruddin Ahmed. The team will recommend strategies for enforcing the proposed VAT law, he added. The NBR has drafted the new law to replace the existing 'distorted' one, complying with conditions of the IMF relating to $1.0 billion extended credit facility (ECF), to be extended to Bangladesh by the Fund. The government is likely to place the draft law for approval of parliament by June 2011 and implement it from 2012, according to sources. Meanwhile, some tax officials have expressed their doubt over placing of the draft law by June as it has drawn strong resentment from the business community. They said the draft law may not be finalised for placing it before parliament by December next. The revenue board organised a workshop for taxmen on March 15-16 last with the support of International Finance Corporation (IFC) to keep them updated on the proposed reform plans. Development partners have shown their interest to provide technical assistance for modernisation of the revenue board, the NBR chief said. "Our aim is to create a taxpayer-friendly environment and to promote trade facilitation by modernising the NBR," he added. The draft VAT law has nearly 31 major changes in the areas of raising tax collection and resolving complexities in payment of VAT. It has also kept a number of provisions to check tax evasion and ensure proper deposit of the amount of money, collected from consumers, to the public exchequer in time. Introduction of online VAT returns and registrations is one of the major components of the reform of the VAT wing. The number of submission VAT returns has remained very low for years. Only less than 50,000 VAT registered companies submit returns every month out of nearly 0.6 million VAT payers. The IMF has long been suggesting the NBR to resolve these issues by introducing a transparent system and replacing the existing VAT law that is distorted because of frequent changes. The NBR has opened a new wing of VAT for large taxpayers in accordance with the suggestions of the IMF. The LTU (large taxpayers unit) is contributing a significant amount of tax to the revenue board. Officials said the proposed law is purported to discouraging tax exemptions by incorporating a measure that would require the approval of parliament for any such exemption. Recently, Prime Minister Sheikh Hasina also instructed the taxmen not to allow tax exemptions indiscriminately and take effective measures to collect tax from the well-off sections of people.
Experts of International Monetary Fund (IMF) in administrative affairs of Value Added Tax (VAT) will set the implementation strategies of the proposed VAT law, in consultation with their local counterparts, to make it business friendly. A mission of the multilateral capital donor is scheduled to visit the country next month to discuss the implementation strategies for the draft of the new law that is expected to be enforced from fiscal 2012-13. The IMF team is scheduled to arrive in the country on April 17 next to set an action plan on the legal reform of VAT administration, said National Board of Revenue (NBR) Chairman Dr Nasiruddin Ahmed. The team will recommend strategies for enforcing the proposed VAT law, he added. The NBR has drafted the new law to replace the existing 'distorted' one, complying with conditions of the IMF relating to $1.0 billion extended credit facility (ECF), to be extended to Bangladesh by the Fund. The government is likely to place the draft law for approval of parliament by June 2011 and implement it from 2012, according to sources. Meanwhile, some tax officials have expressed their doubt over placing of the draft law by June as it has drawn strong resentment from the business community. They said the draft law may not be finalised for placing it before parliament by December next. The revenue board organised a workshop for taxmen on March 15-16 last with the support of International Finance Corporation (IFC) to keep them updated on the proposed reform plans. Development partners have shown their interest to provide technical assistance for modernisation of the revenue board, the NBR chief said. "Our aim is to create a taxpayer-friendly environment and to promote trade facilitation by modernising the NBR," he added. The draft VAT law has nearly 31 major changes in the areas of raising tax collection and resolving complexities in payment of VAT. It has also kept a number of provisions to check tax evasion and ensure proper deposit of the amount of money, collected from consumers, to the public exchequer in time. Introduction of online VAT returns and registrations is one of the major components of the reform of the VAT wing. The number of submission VAT returns has remained very low for years. Only less than 50,000 VAT registered companies submit returns every month out of nearly 0.6 million VAT payers. The IMF has long been suggesting the NBR to resolve these issues by introducing a transparent system and replacing the existing VAT law that is distorted because of frequent changes. The NBR has opened a new wing of VAT for large taxpayers in accordance with the suggestions of the IMF. The LTU (large taxpayers unit) is contributing a significant amount of tax to the revenue board. Officials said the proposed law is purported to discouraging tax exemptions by incorporating a measure that would require the approval of parliament for any such exemption. Recently, Prime Minister Sheikh Hasina also instructed the taxmen not to allow tax exemptions indiscriminately and take effective measures to collect tax from the well-off sections of people.