NBR mulls package VAT-like tax | The Daily Star
12:00 AM, April 10, 2019 / LAST MODIFIED: 12:00 AM, April 10, 2019

NBR mulls package VAT-like tax

The National Board of Revenue (NBR) is likely to impose a fixed or package VAT-like tax rate under the new VAT law that is scheduled to come into effect from July 1 this year, said its chairman, Md Mosharraf Hossain Bhuiyan, yesterday.

“There will be something like package VAT this year,” he told a discussion with economists and representatives of professional bodies on possible tax measures for fiscal 2018-19 at the NBR headquarters.

Package VAT is a fixed amount of tax that small businesses have to pay to the revenue administration under the VAT law 1991, which is currently effective.

The revenue administration organised the event to hear views and recommendations from stakeholders in the run-up to framing tax proposals for next fiscal year.

Bangladesh Economic Association (BEA), the Centre for Policy Dialogue (CPD), and PricewaterhouseCoopers (PwC) shared their recommendations.

The BEA suggested framing tax measures in a way that contributes to the reduction of multi-dimensional inequality in the economy and at the same time ensures high economic growth.

The CPD recommended expediting reform and automation of tax administration and tax systems. It also suggested giving a detailed outline of the new VAT law implementation plan and rates ahead of the budget so that all get a clear idea.

Bhuiyan said measures related to the VAT law would be brought through a finance bill, which was usually placed by the finance minister during the unveiling of the national budget.

“It is difficult to clear everything now,” he said, adding that the NBR has already given ideas about the number of VAT rates. But the sector specific VAT rate will be unveiled at that time, he added.

“We will take some measures next fiscal year to ensure tax compliance of all registered taxpayers,” he said.

BEA President Prof Abul Barkat said high economic growth was necessary but that growth should reduce inequality.

“Tax measures can play an important role in narrowing inequality. So we want a tax structure that will contribute to reducing inequality,” he said, suggesting higher tax on affluent people and emphasising collection of direct tax.

Barkat favoured protecting interests of domestic industries and the services sector. Measures should be taken to reduce the cost of doing business to encourage private investment, he said.

“We are also in favour of increasing our participation in the global value chain.” The BEA suggested revision of assets in every three years and imposition of property tax to increase state's revenue. It recommended expansion of the tax administration up to the grassroots level.

“We want to get rid of the system of tax exemption. We do not want to see an exemption-ridden tax system. We are against it,” said Barkat.

Towfiqul Islam Khan, senior research fellow of the CPD, said a lot of tax incentives have been given in many areas and these were given on ad-hoc basis in many cases.

There will be informed discussion if the NBR discloses the amount of total tax incentives it gives to various sectors, he said.

Khan said the NBR should knock on the doors of the registered taxpayers who have not submitted returns.

“We have found in our study that 75 percent of the rich people do not pay tax,” he said He also suggested the tax administration introduce collection of source tax electronically.

At another discussion, the Foreign Investors' Chamber of Commerce & Industry (FICCI) urged the NBR to allow six months' time so that businesses could prepare themselves to comply with the changed rules and rates under the new VAT law.

Time is necessary so that we can properly implement the changes, said FICCI President Shehzad Munim.

The FICCI also demanded reduction in corporate tax rates and a roadmap from the government regarding corporate tax structure.

“It becomes easy to take investment decisions if there is a roadmap and clarity in tax rate,” he said.

Mahtab Uddin Ahmed, chief executive of mobile phone operator Robi, demanded budgetary measures to reduce cost of digital services.

Expansion of digital services, including transactions, will enable taxmen to expand the tax net, he said.

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