Sunday, October 20, 2019

Finance minister says misunderstanding over new VAT law has ended

  • News Desk,
    Published: 2019-05-14 19:47:56 BdST

There is no difference of opinion between the government and businesses over enforcing the new value added tax or VAT law, Finance Minister AHM Mustafa Kamal says.

“There were some misunderstandings with them about the implementation of the new VAT law. Those’ve been completely removed,” he said after a meeting with the businesses and tax administrator NBR in Dhaka on Tuesday, according to a statement of the ministry.

The VAT law will be implemented from July 1 next and the businesses have pledged that they will extend their cooperation, he added.

The VAT law 2012, which was made at the prescription of the International Monetary Fund or IMF to boost revenue collection, was not well received by the business people, who fear complexities.

It was expected to be implemented from 2015 but was deferred several times amidst pressure from a section of businesses and lobby groups.

In 2016, the then finance minister AMA Muhith had decided to implement the new law, but backtracked following traders’ protests.

He had then said the law would be implemented from 2017, but had to abandon the plan again.

Prime Minister Sheikh Hasina had intervened and deferred the enforcement of the law by two more years at the time. 

Muhith had been against implementing the uniform rate in one go as prescribed by the IMF. There would be several thresholds during implementation in 2019, he had said.

The businesses had alleged this time that the government had not been speaking to them though the time to implement the law was nearing.  

They had sent letters to Finance Minister Kamal and NBR Chairman Mosharraf Hossain Bhuiyan alleging confusion over VAT rates.

Finally the finance minister and NBR chief sat with the businesses at the ministry in Dhaka’s Sher-e-Bangla Nagar.

Shafiul Islam Mohiddun, outgoing chief of apex trade body FBCCI, said after the meeting that the businesses were “always by the side of the finance minister for national development”.

“He has told us that taxes will not increase on any product, but the tax scope will widen. He doesn’t want prices of any product to go up due to VAT,” he said.     

Muhith’s successor Kamal, who will present the national budget next month, declined disclosing the rates now, but hinted these will not be raised in the next budget, rather reduced.

“The businesses felt reassured after we promised that the law will be friendly to them. So there is no gap between them and the NBR now,” the minister said, adding that the new law will be win-win for the people, government and businesses.

Both Kamal and Mosharraf pointed out that there are scopes of changing the law if any problems arises after implementation.

A joint working group with representatives from the NBR and FBCCI will be formed to reform the VAT law, Mosharraf said. 

Newly elected FBCCI President Sheikh Fazle Fahim and Vice-President Siddiqur Rahman, among others, attended the meeting.