New VAT law will be introduced in phases
The new VAT law will be introduced in phases and not in one go, Finance Minister AMA Muhith said yesterday.
“It will not be implemented 100 percent from July 1. It will be implemented gradually,” he said at a meeting with an MCCI delegation led by its President Nihad Kabir at the secretariat.
Before the VAT law comes into force, rules should be framed so that the businessmen can comply with, Kabir said.
After the rules are made the businessmen must be given a transition period. If that is not done, the businessmen would not be able to make any compliance on the basis of rules.
“Only a few months are left but the businessmen know nothing about the rules,” Kabir added.
The finance minister shouldered the blame for the rules not being made yet. “I have become much slow.”
Before the law is put into force the rules must be made, he said.
The leaders of the Metropolitan Chamber of Commerce and Industry told the finance minister that the economy has made commendable progress in the past one and a half decades by way of steady growth of the gross domestic product, per capita income, export earnings, foreign exchange reserves and poverty reduction.
Bangladesh aims to become a middle-income country by 2021 and a developed economy by 2041, and to realise the goals the GDP will need to grow at an annual rate of at least 8 to 10 percent in the coming years, the MCCI said.
Despite notable successes there are many weaknesses in the economy, some of which are quite serious.
For instance, new investment is not coming up because of a weak investment climate.
The MCCI identified the problems as: inadequate supply of infrastructure, inefficient government bureaucracy, inadequately educated workforce, high tax rates and cumbersome tax regulations, crime and theft, insufficient capacity to innovate and poor work ethics in the labour force.
To tackle them, the country's oldest chamber suggested a strong legal framework, a favourable political environment, good governance and policy continuity.
“Acceleration of economic growth will require a series of difficult second generation reforms.”
The reforms should go far beyond mere consolidation of macroeconomic stability. It should comprise measures to build up supply capacity in major production sectors, improve public administration and ensure well-functioning financial and labour markets.
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