Badrul Ahsan :
The government is likely to impose additional supplementary duty (SD) on tobacco products to offset losses after implementation of the new VAT law.
The country will incur a significant amount of revenue loss after reduction of VAT rate from 15 per cent stipulated in the new VAT and Supplementary Duty Act-2012 which is scheduled to come into force from July 1 this year.
Currently, SD range of 30 per cent to 65 per cent is applicable on cigarettes and bidi based on price slabs while 100 per cent SD is applicable for Zarda and Gul.
“We are actively thinking to impose additional SD on tobacco considering its effect to the public health,” a member of National Board of Revenue (NBR) told The New Nation preferring anonymity.
He said SD at local stage is usually imposed on goods and services which are considered as health hazardous and luxury items.
“We will not let the tobacco companies get duty benefit of the new VAT law as the product causes huge health hazards. Using tobacco causes huge amount of expenses for treatment which is largely higher than the companies’ contribution to the National Exchequer,” he added.
Recently, Finance Minister Abul Maal Abdul Muhith hinted that the VAT rate will be lowered following strong opposition from businesses and other stakeholders, saying that 15 per cent would be very high compared with other countries having similar economic strengths.
Though Muhith is yet to declare the new rate, officials said that it might be set at 12 per cent or 13 per cent.
Currently, all sectors, except 15 services and 70 products which pay VAT on truncated value or tariff value, are under 15 per cent VAT rate under the existing law.
Reduction of the rate by 1 per cent may cause revenue loss of Tk 4,000 crore a year, Muhith said.
Officials said that imposition of additional SD would offset the loss.
SD may be imposed proportionately in line with the reduced VAT rate or by one per cent higher than the reduced rate, they said.
The government is likely to impose additional supplementary duty (SD) on tobacco products to offset losses after implementation of the new VAT law.
The country will incur a significant amount of revenue loss after reduction of VAT rate from 15 per cent stipulated in the new VAT and Supplementary Duty Act-2012 which is scheduled to come into force from July 1 this year.
Currently, SD range of 30 per cent to 65 per cent is applicable on cigarettes and bidi based on price slabs while 100 per cent SD is applicable for Zarda and Gul.
“We are actively thinking to impose additional SD on tobacco considering its effect to the public health,” a member of National Board of Revenue (NBR) told The New Nation preferring anonymity.
He said SD at local stage is usually imposed on goods and services which are considered as health hazardous and luxury items.
“We will not let the tobacco companies get duty benefit of the new VAT law as the product causes huge health hazards. Using tobacco causes huge amount of expenses for treatment which is largely higher than the companies’ contribution to the National Exchequer,” he added.
Recently, Finance Minister Abul Maal Abdul Muhith hinted that the VAT rate will be lowered following strong opposition from businesses and other stakeholders, saying that 15 per cent would be very high compared with other countries having similar economic strengths.
Though Muhith is yet to declare the new rate, officials said that it might be set at 12 per cent or 13 per cent.
Currently, all sectors, except 15 services and 70 products which pay VAT on truncated value or tariff value, are under 15 per cent VAT rate under the existing law.
Reduction of the rate by 1 per cent may cause revenue loss of Tk 4,000 crore a year, Muhith said.
Officials said that imposition of additional SD would offset the loss.
SD may be imposed proportionately in line with the reduced VAT rate or by one per cent higher than the reduced rate, they said.
