WB loan to increase VAT collection

The World Bank (WB) has approved a loan to modernise Bangladesh's VAT administration and collection system. WB’s Dhaka office on Saturday said its board approved the $ 60 million credit on Friday. A project styled ‘VAT Improvement Programme’ will introduce automation, including on-line VAT payment services, and improve transparency in VAT administration and collection system with this loan. The credit from its concessionary arm IDA has 40 years for maturity with a 10-year grace period and carries a service charge of 0.75 per cent. The project aims to increase VAT’s contribution to the GDP by at least one percentage point by 2019 when it targets to push the number of active registered taxpayers to 85,000 from current 35,000. VAT accounted for 3.7 per cent of the total GDP in 2012-13 fiscal. WB Country Director in Dhaka Johannes Zutt said Bangladesh’s tax collection remains ‘low’ compared to other South Asia countries. But he said it was ‘critical’ to increase tax collection ‘for faster economic growth and to overcome poverty’. The project will support the government to implement the new VAT law which comes into effect next year and aims to provide better services and reduced administrative costs for taxpayers. The project will include a campaign to raise awareness of the need to register and file VAT, according to bdnews24.com.