Dhaka, Bangladesh (BBN)-The Bangladesh government for the second time backpedaled on its stance to enforce the new Value Added Tax Act from the 2016-17 fiscal.
Finance Minister AMA Muhith revealed the information while unveiling the national budget on Thursday in National Parliament of Bangladesh.
The minister pointed out that the government could not fully implement the new VAT law mainly due to lack of proper preparation.
“Over the years domestic Value Added Tax (VAT) has emerged as the single largest source of government revenue collected by the National Board of Revenue (NBR),” the finance minister said.
He also said that revenue collection keeps growing as expected as an outcome of several reform interventions made by our government in the last several years, positive change in the mindset of the taxpayers and officials.
Value Added Tax and Supplementary Duty Act, 2012 was enacted after a lot of deliberations. Under the new Act, it is important for both the manufacturers and service providers to keep proper accounts of their transaction at every stage of supply of goods and services.
“Unfortunately, the necessary preparation for achieving the above objective is far from satisfactory. Under the above circumstances, government has decided not to fully implement the newAct from the next financial year,” the minister pin-pointed.
“Rather, government has decided to fully implement the new Act from 1st July of 2017. Our objective to implement the new Act has not changed, we will only implement the new Act after one year,” he added.
The parliament in 2012 passed the law that emphasised using proper accounting methods for all businesses to collect VAT in every value addition made by manufacturers and service providers, Finance Minister AMA Muhith said.
The rules related to the law have already been vetted by the law ministry. In addition, a new project called VAT Online Project was also approved in this line.
So, online registration and online return submission will begin soon for taxpayers, he said.
The minister also said that necessary meetings, seminars, workshops and partnership dialogue were held in the ongoing fiscal year and will also continue in the next fiscal year.
Once the law comes into effect, taxpayers can register, submit their returns, pay VAT and get refunds online from home.
Terming the law a good one, the minister said businesses have to develop their accounting skills significantly to pay VAT in every value addition.
The minister urged the businesses to develop their accounting methods in the next one year to create a win-win situation for both businesses and the government.
Muhith however proposed to make some changes in the existing Value Added Tax 1991 and Value Added Tax Rules 1991 to ease some procedural issues.
The minister proposed to cancel the existing system for traders to get prior approval before fixing the prices of products, ensure single registration facilities for a business owner to run all his businesses that are under a single ownership, reduce time for settlement of dispute through Alternative Dispute Resolution to 50 working days from the existing 60 working days etc.
Regarding the new VAT law, the minister said it will not create VAT burdens on any businesses as the system will impose VAT on every single value addition, while there will also be systems for VAT rebate.
The minister also recommended cancellation of VAT exemption benefits for travel agencies and meditation facilities from the upcoming fiscal year.
Although fabrics manufactured by hand-run looms will enjoy the VAT exemption, the fabrics made through power looms will have to pay the VAT from the next fiscal.
The minister also proposed bringing all classified advertisements, except ads related to the death of any person, under the VAT net.
In regards to the truncated value-based VAT rate, he said nit VAT on services obtained from motorcar grazes and workshops, and dockyard services will be raised to 10% from the existing 7.5%, VAT on services from construction firms will be raised to 6% from the existing 5.5%, VAT on petroleum product transportation will be set at 4.5%, and at 10% for other product transportation.
Nit VAT on immigration advisory services and sponsorship services will be doubled to 15% from the existing 7.5%.
The finance minister also suggested making changes in the existing gazette notification to bring all manufacturing companies under Dhaka City Corporation and Chittagong City Corporation under the VAT net.
The government will collect the Electronic Cash Registrar (ECR) and Point of Sales (POS) machines by themselves and will deliver them to the companies. He proposed the government to amend the existing rules and orders to make it mandatory for all the mega resorts, hotels and companies to use the ECR and POS.
At present, use of ECR and POS machines is mandatory for companies under 11 categories only established at the district headquarters.
BBN/ANS/AD