Gazi Anowarul Hoque :
The National Board of Revenue (NBR) is passing the busy time to devise a new work plan to achieve the gigantic revenue target following the suspension of the new VAT Law having a provision of 15 percent uniform VAT rate, for the next two years, sources said.
Unlike previous budgets, which were passed by parliaments with minor changes, this year’s proposed budget could have major changes to tax measures.
The new VAT law, which the government took five years to get ready, was supposed to come into effect on July 1.
“Yes, we’re planning to prepare a new plan for the VAT collection as the implementation of the new VAT Law has been deferred for two years,” a senior NBR official told the New Nation.
Officials involved in the budget preparation said the finance minister places budget proposal in early June every year and minor changes are made during its passage.
This year, Finance Minister AMA Muhith placed the budget proposal on June 1, with the new VAT and Supplementary Duty law, which seeks to impose flat 15 percent VAT instead of multiple rates.
The government, at the prescription of International Monetary Fund (IMF) in 2012 and to fulfil the conditions of $1 billion loans, framed the new VAT law but it re-fixed the deadline for enforcing the legislation twice. The last deadline was July 2017.
But in the face of opposition from businesses, lobby groups and fear of rise in living cost, policymakers now prefer deferring the new VAT law for the third time and continuing with the existing VAT Act 1991 by bringing some changes to it, said insiders.
The government had aimed at collecting additional Tk 63,190 crore in the 2017-18 fiscal year with a target of Tk 248,190 crore total collection. Its last year’s revised target was Tk 185,000 crore while that of non-NBR tax revenue collection at Tk 8,662 crore and the target of non-tax revenue collection set at Tk 31,179 crore.
Of the Tk 63,190 crore, Tk 22,579 crore was supposed to be from the new VAT law.
Of the total revenue target of NBR, Tk 91,344 crore will come from VAT while Tk 86,867 crore from income tax and corporate tax, Tk 30,153 crore from import and export duty and Tk 38,212 crore will be generated from supplementary duty.
The VAT target for the 2016-17 financial year was initially set at Tk 72,764 crore but it was revised at Tk 68,675 crore.
Officials said economic growth and rise in prices of goods and services usually generate nominal growth of revenue collection every year.
To ensure collection of the additional money, the National Board of Revenue (NBR) would now have to work on finding out areas of revenue based on the existing VAT Act 1991, said officials.
Insiders said the truncated VAT rates, now applicable to nearly 20 items, including flats, might be increased for some items.
VAT based on tariff value or minimum value of products might be increased for some products as well.
At present, the indirect tax is collected for 85 products such as biscuit, paper and exercise books, rods and bricks based on tariff value.
The government might also withdraw exemption from VAT for some items to increase revenue collection, said officials of the Ministry of Finance.
The government plans to carry on with its VAT system automation scheme, a Tk 550 crore project most of which is financed by the World Bank.
But it might take a couple of months to reconfigure the software to incorporate provision for multiple rates of VAT instead of the flat rate, said revenue officials.
The NBR official said they will look for those organisations which are now outside the VAT net to achieve the target.
As per the NBR estimation, there are about 50 lakh organisations across the country which is eligible to pay VAT. But only 8.84 lakh of them are VAT-registered while only 34,000 organisations submit their VAT returns. “We’re planning to increase this number significantly,” he said.
Following the suspension of the 15 percent flat VAT rate, the pressure for revenue collection will be high from this sector, the NBR official said.
“We’ve to find out new pockets apart from strengthening our monitoring on the existing sources,” he said.
