VAT law delayed by another year
The National Board of Revenue has extended the deadline for implementing the contentious VAT law by a year to July 2016, due to delays in software procurement and opposition from businesses.
The revised plan was posted on the NBR website. The VAT law was originally scheduled to roll out in July 2015.
The disclosure comes after the International Monetary Fund demanded an official roadmap for the implementation of the VAT law before it releases the sixth instalment of the $1 billion Extended Credit Facility loan.
Seeing the government dithering over the VAT law, the multilateral lender in October decided to defer the release of the instalment, amounting to around $140 million.
In the new roadmap, the NBR pledged to complete the procurement of the software, hardware and networking materials needed to build an integrated VAT administration system by June 2015.
A tender has already been floated at the end of November, with the winner set to start work within one month of signing of the contract with the government.
The NBR aims to complete the first phase of the two-staged tendering process by January 19 next year.
The revenue authority cancelled the first tender in July following complaints of lack of transparency by a representative of a bidder.
It is also preparing to float the tender to appoint consultant for the Tk 551.52 crore-project. Of the amount, the World Bank will provide about Tk 470 crore in loans.
Other than the detailed plan to procure software, the roadmap also mentioned modifications to be made to the newly-framed law based on the report from the panel comprising representatives from the NBR and the Federation of Bangladesh Chambers of Commerce and Industry.
The committee is due to submit its report on required changes in the law soon, but it depends on the government which recommendations will be taken up, said a senior NBR official. Framed to fulfil one of the conditions for IMF's ECF loan, the new VAT law has been met with animosity by the business community, as it stipulates a flat 15 percent VAT and does away with package VAT that many retailers and small businesses currently enjoy.
The new law has also increased documentation requirements for firms and given additional power to revenue officials to recover arrears. FBCCI said it would be difficult for businesses to comply with the various provisions of the new law.
The revenue administration is aiming to place the possible amendments to the law during the budget session in parliament in June next year. Rules and gazettes will be framed in the light of the law, said the official, adding that the VAT registration process will start in January 2016 with the aim to make the law effective from July of that year.