Rod prices will go up for new VAT law

The prices of some items like rod may go up for application of a flat 15 percent VAT under the new law scheduled to come into effect from July, said the National Board of Revenue yesterday.

“We have conducted an impact assessment where we have found that the prices of one or two items like MS product may go up when it will come under standard VAT,” said NBR Member VAT Policy Jahangir Hossain at a pre-budget meeting with the members of Economic Reporters' Forum. NBR Chairman Md Nojibur Rahman was also present at the event.

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At present, each tonne of MS product, which costs Tk 45,000-Tk 50,000, face tax of about Tk 5,000 based on the tariff value system, according to Hossain.

“But we can tackle such a situation if we can recover from management deficiency at customs points,” he said.

The government aims to implement the new VAT law from fiscal 2017-18. The law seeks to impose 15 percent universal VAT instead of multiple rates at present.

For example, consumers have to pay 5 percent VAT, which is also termed consumption tax, on electricity bills at present. But once the new law kicks in, the VAT rate for electricity will rise to 15 percent.

The new VAT law has the provision to collect more tax from health hazardous tobacco and tobacco products.

“We are almost at the final stage of the framing the plan.”

The implementation of the new law will reduce the hassles faced by businesses at the NBR field offices.

“We want to confidently say that the whole VAT administration will turn into a service-oriented organisation after the implementation of new VAT,” he said.

The revenue authority has opened a call centre to provide better services to taxpayers. One can get answers to VAT-related queries by calling to 16555, Hossain added.

At the discussion, NBR Chairman Rahman said the revenue authority will hold the century-old tradition of businesses -- halkhata -- to encourage taxpayers to clear up their dues at the end of the last month of the Bangla year, termed the Chaitra Sankranti.

In business terms, halkhata means updating book of accounts of the outgoing year and opening new ones on the eve of Bangla New year.

“We will offer our taxpayers sweets to mark the Chaitra Sankranti. By holding this, we are offering taxpayers the scope to clear due taxes in a respectable atmosphere.”

The revenue authority will engage the youth for implementation of the VAT law. 

Rahman also said the number of electronically generated TINs has exceeded 28 lakh early this week.

“If all the members of a family pay tax we will give recognition to the family,” he added.

At the discussion, ERF members urged the revenue administration to take steps to curb the rising illegal capital flight from the country, catch the tax dodgers and give recognition to compliant taxpayers.

Some ERF members also suggested the authority to not impose the 15 percent VAT on gas and electricity as the spike may stoke inflation and affect the fixed and low-income people.