Badrul Ahsan :
The National Board of Revenue is set to ensure protection of some more local industries from uneven competition with foreign one by imposing Supplementary Duty (SD) at import stage under the new value-added tax act, sources said.
A high-powered team of the VAT wing of the revenue board has already started working to identify the goods produced in the country that need further protection.
Under the new VAT and Supplementary Duty Act-2012, which is scheduled to come into force from July 1 this year, the number of products having supplementary duty (SD) at the import stage is reduced to 170 products from the existing 1,430.
Entrepreneurs have been expressing their concern over withdrawal of SD from many products produced in the country saying that it would severely reduce the level of protection for the domestic industries. Local products will not be able to survive as the price of imported finished goods will be lower due to withdrawal of the SD.
Local entrepreneurs have sought protection for few more years to achieve competitiveness with imported goods.
According to an NBR estimate, the level of protection for the domestic industry will drop to 23.3 per cent from the existing 50.7 per cent due to the measures to be implemented under the new law.
The government will also lose Tk 3,000 crore in revenue because of the reduction in number of products which are subject to SD.
In fiscal year 2014-15, the revenue board received Tk 17,000 crore from the sector, but the amount will drop to Tk 14,000 crore under new VAT regime. In this context, the NBR took the decision in a recent meeting with NBR Chairman Md Nojibur Rahman in the chair following widespread demand from local investors.
The revenue board also found negative impact on locally produced goods like ceramics and plastic items due to withdrawal of SD. The sectors will have to face stiff competition from imported goods.
Under the review, the number of items on which SD will be imposed may be increased three times, more or less, officials said.
The NBR will also impose regulatory duty on some items in case of any problems in imposition of SD, they said.
According to the Customs Act-1963, the government may impose a regulatory duty on any goods at the rate of two times of the highest rate of customs duty which is now 25 per cent.
Under the provision, the government may impose highest 50 per cent regulatory duty on any good.
They said that the government might be constrained to amend the new law to increase the number of products.
Finance Minister Abul Maal Abdul Muhith also had instructed the NBR to examine the issue to find out ways to save the local industry.
Under the new law, supplementary duty will be applicable to selected luxury items like motor car and health hazardous goods, tobacco and alcohol.
