Muhith renews pledge to enforce new VAT law this year

Finance Minister AMA Muhith yesterday renewed his pledge to implement the new VAT law from July this year to boost revenue receipts.

“VAT collection will become easy if the new law becomes effective,” he told reporters after a meeting with the visiting deputy managing director of International Monetary Fund, Mitsuhiro Furusawa, in the capital.

The IMF has long been urging the government to go for a new VAT regime.

The government, in line with the IMF prescription, framed the VAT and Supplementary Duty Act 2012 and had planned to implement it in 2015.

But the government deferred the plan amid opposition from businessmen to accept a 15 percent 'universal' VAT rate instead of multiple rates effective now. Muhith said the IMF official wanted to know about the progress in the implementation of the new law.

In an interview with The Daily Star yesterday, Furusawa said Bangladesh needs increased public investment to maintain competitiveness and generate further productivity growth.  “This much needed increase in investment is conceivable from a boost to revenues and FDI. It is, therefore, important that the already delayed VAT law is implemented,” he said.

Muhith told reporters that businesses have some demands and a joint panel is working on the issue to suggest steps in this regard.

“A summary paper has been prepared and signed. It will come to me soon,” he said, adding that the implementation of the law will not be delayed anymore.

“This is not for satisfying the IMF. The new law will ease the process of VAT collection, reduce harassment and increase revenue collection,” he said.

The new VAT law, which the government aims to implement through the automation of VAT systems and VAT administration, will replace the existing VAT law introduced in 1991.