Special Correspondent :
The government on Monday formed a five-member committee to determine VAT rates on imported gold and jewelry export.
Apart from this, the body will also recommend the amount of money that can be collected as VAT to legalize gold brought into the country through illegal channel.
Officials said that the government took the initiative in order to introduce a new gold regime in the country as stated in the Gold Policy-2018, endorsed by the Cabinet on October 3.
Led by Commerce Secretary Shubhashish Bose, the committee will determine the VAT rates within two weeks. The committee, includes one member each from Commerce and Finance Ministries, National Board of Revenue and the central bank, was formed in an inter-ministerial meeting with Finance Minister AMA Muhith in chair.
Finance Secretary Abdur Rouf Talukder, NBR Chairman Md. Mosharraf Hossain Bhuiyan and Commerce Secretary Shubhashish Bose attended the meeting, among others, held at the Bangladesh Secretariat.
Official sources said that Finance Minister wants to impose Tk 1000 as VAT on each bhori of imported gold, but the gold traders want it Tk 300 only.
“The government wants to intervene in the local gold market by fixing VAT on imported gold, export of gold jewelry and prices of the precious metal at reasonable level,” a finance ministry official told The New Nation yesterday on condition of anonymity.
He said the decision was taken to ensure transparency and accountability of the gold traders and prevent unabated entry of gold into the country through illegal channel, which leads to huge revenue losses for the government over the years.
According to a Transparency International Bangladesh report, the government suffers a revenue loss between Tk 487 crore and 974 crore annually due to import of gold illegally.
According to an estimate, the overall annual demand of gold is around 35-40 tonnes for the local gold industry.
Of which, around 10 per cent of demand is met from recycled gold. The lion share of the demand of fresh gold weighing 24-32 tonnes is met from smuggled gold.
The finance ministry official said the government imposed Tk 3000 VAT on March 7, 2011 on import of per bhori gold in line with a recommendation of the Commerce Ministry.
“But the government has failed to realise even a single penny as VAT till the date indicating gold import through legal channel totally halted and since then illegal gold market is flourishing. Even the domestic gold price always remains high in line with international market because of price manipulation by the gold traders,” he added.
He further said all these factors have forced the government formulate a gold policy so that it can effectively intervene in the domestic gold market. The policy has been drafted considering interest of the consumers as well as the gold industry.
“Ghostly affairs has been continuing in the gold market over the years. It has been imperative to free the market from the ghostly affairs. And that can be done by fixing VAT on imported gold, export of gold jewelry and domestic gold prices at reasonable level since the price difference between the local and international market is illogical,” Finance Minister AMA Muhith wrote in a note to Commerce Minister Tofail Ahmed.
In the note, Muhith mentioned that the domestic gold prices now stands at Tk 40,000 per bhori showing Tk 14,000 higher from that of the international market.
“This is not acceptable in any way. We have to take drastic step to overcome the situation. But the step should come from the government’s highest level,” said Muhith in the note written on August 1.
Muhith in the note motioned that there is no information regarding the total amount of gold held by the people and traders in the country.
Irked by the prevailing situation of the gold market, Muhith said the government should fix a logical gold prices prior to finalise the gold import policy.
Muhith added that government would also encourage export of gold ornaments through giving policy support to the export-oriented traders.
“We will fix separate tax for import of gold and export of ornaments in order to introduce a new gold regime in the country. The new regime will be introduced through issuing a Statuary Regulatory Order (SRO).”
He, however, proposed to form a Secretary-level committee to complete the whole task.
