VAT collection target to be 40pc higher
The government is likely to gun for VAT collection 40 percent higher than current fiscal year's revised target in fiscal 2017-18 by way of implementation of the new VAT law that commands a uniform 15 percent VAT for most goods and services.
Revenue collectors may be given the task of collecting Tk 91,000 crore next fiscal year, up from current year's revised collection goal of Tk 65,000 crore, said a senior official of the finance ministry.
Word on the increased revenue target comes at a time when the policymakers are mulling over a 3 percentage point cut in VAT rate under the new law to bring it to 12 percent.
In addition, the government is considering increasing the VAT-free turnover ceiling to Tk 36 lakh and hiking the highest threshold of turnover tax to Tk 1.5 crore annually to make businesses happy, the official said.
Policymakers said although the rate cut may cause a loss of revenue, the end of VAT collection at reduced rates applicable for 65 products and 22 services under the existing VAT law will increase receipts. The government scheme to install 50,000 electronic cash registers at the retail level is also expected to curb tax evasion and increase collection.
The new VAT law will take effect from July 1.
Also, the increase in supplementary duty rates for some key revenue-generating products and services such as tobacco and mobile will make up for the loss in revenue receipts from the slash in uniform rate to 12 percent.
The government is also considering impose SDs on the import of 700-800 products in the upcoming fiscal year from existing 170 items.
Insiders said the hike in the list of items to face SDs is planned in the face of demands from businesses for protection to local industries from competition with imported products and safeguard the interest of export-oriented industries.
The government is expected to fix the total revenue collection goal for the National Board of Revenue at Tk 248,000 crore, which 34 percent higher than the revised target for fiscal 2016-17.
VAT is the biggest source of revenue collection for the government, followed by income tax and import duty, according to the NBR.