VAT causes split in businesses

Businesspeople stand divided over the value-added tax (VAT) dispute with small traders sticking to demands.
A section of small businesses raised four-point demands, including continuation of the package VAT with its rate cut. Other members of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) play a different tune on the demand.
Babosayee Oikya Forum (BOF), mainly businessmen in city's old Dhaka, earlier had set a deadline for meeting their demand that expired Sunday.
However, leaders of BOF agreed to wait until the end of this month, with their demand following assurance from the revenue authority after a meeting at the National Board of Revenue (NBR).
Small businesses felt that their demands were ignored by the apex trade body, the FBCCI, and also in a joint-committee report prepared by the NBR and the FBCCI.
"Recommendations of the 137 small associations were not considered properly in the joint-committee report, prepared by the FBCCI and the NBR," said one member of BOF.
Helal Uddin, director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said VAT on bread and plastic slipper that has been imposed in the budget for current fiscal year is affecting small businesses.
"I wonder why it is not considered seriously in by FBCCI board," he added.
FBCCI president Abdul Matlub Ahmad said the proposal for VAT waiver on bread and plastic slipper was placed before the Prime Minister.
"The businesses have to follow some rules and develop the culture of payment of VAT," he said.
Under the existing system, the government is receiving less than Tk 300 million as VAT from the small business, he added.
All businesses have to start to pay at least a nominal amount of VAT in compliance with the rule, he said.
Amir Hossain Noorani, president of Bangladesh Iron and Steel Importer Association and also one of the members of the (BOF), said a businessman would have make a profit of Tk 82 a day if the VAT-free turnover ceiling was set at Tk 3.0 million.
"How businessmen will survive and meet other costs of the business with that threshold," he said.
Small businesses want end of harassment on submission of VAT returns, he added.
The demands of the BOS include reduction in package VAT and continuation of the system in the next fiscal, reintroduction of turnover tax in manufacturing units in Dhaka and Chittagong city corporation area, VAT exemption for plastic and rubber sandals up to Tk 120, bread and biscuit per kilogram up to Tk 100.
Joint committee proposals are VAT exemption for small businesses up to a turnover of Tk 3.6 million, offer for businesses to enjoy 3.0 per cent turnover tax having annual turnover between Tk 3.6 million and 150 million, allowing businesses to enjoy a reduced rate of VAT who will not be able to obtain VAT rebate, introducing 2.0 per cent VAT at business stage, irrespective of turnover, for businesses having turnover above Tk 3.6 million etc.
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