Tax law reform bid to find place in next finance bill
Thursday, 31 December 2009
FE Report
The National Board of Revenue (NBR) has decided to reform tax laws and rules enforced by its existing three wings dealing with Value Added Tax (VAT), customs, and income tax in an effort to come out of the uneven system.
"We have taken moves to reform the existing tax laws and rationalise the tariff structure. The changes will come into effect in the next finance bill," NBR chairman Dr. Nasiruddin Ahmed said at a press conference in the city Wednesday.
"Two teams have been working on preparing a set of modern VAT and customs laws," he said. The NBR would arrange a public event on February 4 to discuss the draft laws, he added. "The revenue board will sit with all stakeholders, including leaders of the apex chamber body, to cull their opinion on tax laws," he said.
Rates of VAT would come into consideration as to whether the government would continue the present tariff system," he said.
He termed VAT a most potential revenue collecting sector as everybody pays the consumption tax irrespective of their income.
"A team has been working since November to reform the VAT laws. Those have been promulgated in 1991, but now there is a huge difference in the actual law and its implementation," the NBR chief said.
Collection of VAT shot to the highest 25 per cent, among the three wings, in the first five months of the current fiscal compared to the corresponding period last year, he said.
Customs laws will also see a radical change in the next finance bill as a team is working on revising the first schedule of customs, he said.
Continuation of the four-tier duty and rationalisation of HS code would come under scrutiny in the reform process of customs laws, he added.
On reforms in income tax laws, the NBR chief said: "We have been focusing on a motivational programme for raising tax compliance. The board has a plan to form a team to reform income tax laws."
"We are mulling to involve students in the motivational programme and the external survey due to acute manpower shortage at the income tax department," Mr. Ahmed said.
"It is necessary to outsource the motivational activity for bringing additional 0.4 million new taxpayers into the income tax net," he said.
"Income tax ensures social equity, justice and investment. Tax collection concerns not only the wing," he said.
On extension of the tenure of Pre-shipment Inspection (PSI) companies that is scheduled to expire December 31 (today), the NBR chairman said the PSI companies would get six months to one year's extension.
"We have sent a proposal to the finance minister seeking his approval giving further extension to the PSI system," he said.
Farid Uddin, who heads VAT and customs administration, said: "It is not possible to phase out the PSI system overnight. It will take time for the customs department to build organisational capacity."
The revenue board needs political decision on the part of the government for phasing out the PSI system by the next one year, he said.
Asked about filing more tax evasion cases, the head of income tax policy department Aminur Rahman said the NBR chief has unveiled revenue collection data of the first five months of the current fiscal.
The board has achieved 15 per cent growth in July-November period collecting Tk 216.16 billion revenue. Of the amount, income tax department has collected Tk 37.93 billion with 23 per cent growth followed by Tk 63.68 billion from domestic VAT and Tk 83.65 billion in import duty.
NBR has surpassed its target in the first five months thanks to the impressive growth of VAT and income tax collection, the NBR chairman said.
The National Board of Revenue (NBR) has decided to reform tax laws and rules enforced by its existing three wings dealing with Value Added Tax (VAT), customs, and income tax in an effort to come out of the uneven system.
"We have taken moves to reform the existing tax laws and rationalise the tariff structure. The changes will come into effect in the next finance bill," NBR chairman Dr. Nasiruddin Ahmed said at a press conference in the city Wednesday.
"Two teams have been working on preparing a set of modern VAT and customs laws," he said. The NBR would arrange a public event on February 4 to discuss the draft laws, he added. "The revenue board will sit with all stakeholders, including leaders of the apex chamber body, to cull their opinion on tax laws," he said.
Rates of VAT would come into consideration as to whether the government would continue the present tariff system," he said.
He termed VAT a most potential revenue collecting sector as everybody pays the consumption tax irrespective of their income.
"A team has been working since November to reform the VAT laws. Those have been promulgated in 1991, but now there is a huge difference in the actual law and its implementation," the NBR chief said.
Collection of VAT shot to the highest 25 per cent, among the three wings, in the first five months of the current fiscal compared to the corresponding period last year, he said.
Customs laws will also see a radical change in the next finance bill as a team is working on revising the first schedule of customs, he said.
Continuation of the four-tier duty and rationalisation of HS code would come under scrutiny in the reform process of customs laws, he added.
On reforms in income tax laws, the NBR chief said: "We have been focusing on a motivational programme for raising tax compliance. The board has a plan to form a team to reform income tax laws."
"We are mulling to involve students in the motivational programme and the external survey due to acute manpower shortage at the income tax department," Mr. Ahmed said.
"It is necessary to outsource the motivational activity for bringing additional 0.4 million new taxpayers into the income tax net," he said.
"Income tax ensures social equity, justice and investment. Tax collection concerns not only the wing," he said.
On extension of the tenure of Pre-shipment Inspection (PSI) companies that is scheduled to expire December 31 (today), the NBR chairman said the PSI companies would get six months to one year's extension.
"We have sent a proposal to the finance minister seeking his approval giving further extension to the PSI system," he said.
Farid Uddin, who heads VAT and customs administration, said: "It is not possible to phase out the PSI system overnight. It will take time for the customs department to build organisational capacity."
The revenue board needs political decision on the part of the government for phasing out the PSI system by the next one year, he said.
Asked about filing more tax evasion cases, the head of income tax policy department Aminur Rahman said the NBR chief has unveiled revenue collection data of the first five months of the current fiscal.
The board has achieved 15 per cent growth in July-November period collecting Tk 216.16 billion revenue. Of the amount, income tax department has collected Tk 37.93 billion with 23 per cent growth followed by Tk 63.68 billion from domestic VAT and Tk 83.65 billion in import duty.
NBR has surpassed its target in the first five months thanks to the impressive growth of VAT and income tax collection, the NBR chairman said.