NBR still prefers uniform VAT rate
The tax administration prefers a single and uniform value added tax rate to bring discipline in the system and avoid complexity, said a member of the National Board of Revenue.
The new VAT law, scheduled to be effective from July 1, has incorporated a single VAT rate of 15 percent.
“We would prefer a single rate, not multiple rates of VAT,” said Jahangir Hossain, VAT policy member of the NBR.
He said multiple rates would be complex to keep accounting under digitised system. It would be difficult to reap the actual benefit of the new VAT law.
He made the comments at a meeting with the business editors of print and electronic media at the Institute of Diploma Engineers Bangladesh in the capital.
The NBR arranged the meeting to exchange views on the new VAT and Supplementary Duty Act-2012. NBR Chairman Md Nojibur Rahman chaired the discussion.
Jahangir said the NBR is confident that the new law would not cause any price escalation as it has provided exemption to some essential items.
Zakir Hossain, deputy director of the VAT Online Project of the NBR, said the maximum retail price (MRP) would be the selling price of products that would reduce the VAT incidence to 13.04 percent from 15 percent. There will be no truncated or tariff value in the new law.
Currently, 15 services are enjoying truncated value and 70 products tariff value. Due to the absence of an effective rebate system, VAT rate is high on those products and services under the existing law. Despite the uniform rate in the new law, the VAT rate will be lower because of the automated rebate system, according to the NBR.
The proper rebate system will keep the net VAT burden lower, said Nojibur Rahman. Jahangir said there would be no inflationary pressure due to implementation of the new law. Businessmen would get tax credit easily with the automated system.
Seven major sectors, including basic foods, medicines, agriculture products, and life saving drugs, would get VAT exemption under the new law.
Rezaul Hassan, project director of the VAT Online Project, said the consumers are the VAT-payers who are not raising any complain about the new law. The NBR wants to ensure that VAT is properly deposited to the public exchequer, he said.
Zakir Hossain said the power division would set a MRP and can claim VAT rebate under the new law. So, the tariff of power will not go up.
He said businesses would be able to claim VAT rebate if their purchase VAT is higher than the sales VAT.
Jahangir said 160 countries have implemented VAT with an average rate of 16.5 percent.
“The new law will plug holes in VAT evasion and reduce tax burden on the existing taxpayers,” he added.
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