The National Board of Revenue (NBR) and the Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) today said they have narrowed their differences and agreed to move forward with government’s plan to implement the new VAT law from July 1, this year.
The agreement came nearly a week after the revenue collector and the apex trade chamber were at loggerheads over the implementation of the new VAT law.
“We have no gap. All our distances and gaps have ended. We are moving forward to implement the law from the first week of July,” Finance Minister AHM Mustafa Kamal told reporters after he chaired a meeting between the NBR and the FBCCI at the NEC auditorium at the Planning ministry premises.
Kamal sat with the top brasses of the two agencies in the aftermath of the exchange of letters between them over the implementation of the new VAT law from the next fiscal year 2019-20.
The FBCCI in a letter to the NBR on May 5 said the new VAT law may fuel inflation and create unrest in the society if implemented from July 1 without adequate “readiness”.
In reply four days later, the NBR accused the country’s apex trade body of obstructing the implementation of VAT and Supplementary Duty (SD) Act. The revenue authority said it made enough preparation to implement the law from July 1.
“The FBCCI has nothing to worry about,” said the revenue authority’s letter addressed to the FBCCI president.
After today’s the meeting, Kamal said the “misunderstanding” that was created is over and the multiple rates of VAT that were decided previously would be applied under the new law.
The law, framed at the prescription of the IMF, originally envisaged a uniform 15 per cent VAT on goods and services, doing away with the multiple rates under the existing law -- a change that sparked protest from businesses, particularly from the FBCCI on grounds that it would hurt small and medium businesses and stoke inflation.
In the face of protests, the government deferred enforcement of the new VAT system law thrice, the latest being in June 2017, when it announced at the eleventh hour about the postponement by two years.
And to ensure smooth implementation of the law from July 1, Kamal, NBR and the FBCCI sat for a meeting on March 31 this year and the businesses agreed in principle with the proposal of multiple VAT rates: 5 per cent, 7.5 per cent, 10 per cent and 15 per cent.
After today’s meeting with the FBCCI, Kamal said the rates decided earlier would remain the same.
“We have no plan to increase rates on any item. We are saying the same that we told earlier. Nothing new has been added,” said Kamal, “We will proceed the way we have started and they (FBCCI) have assured us that they have no objection. Because we have included all that they demanded.”
FBCCI President Md Shafiul Islam Mohiuddin said they have been assured from Kamal that rates of taxes would not increase on any item, rather tax may decline in some areas.
“That is enough for us to have trust and confidence. We want to keep faith on the assurance that we got from the honourable minister,” he said.
Mohiuddin said a decision has been taken on the formation of a working committee in order to settle issues between the revenue authority and business and this is very positive.
He said they were promised that the revenue authority would take its consideration if any product or sector suffers during the implementation phase of the law. “We have kept enough confidence on that and we want to move forward now,” he said.