Finance Minister Abul Maal Abdul Muhith has said the uniform VAT rate will remain unchanged at 15 percent.
“There’s a lot of discussion over the issue and we have decided to keep it at 15 percent in the next fiscal year,” Muhith told a group of reporters at his secretariat office in Dhaka on Saturday.
Muhith signalled that he would take the VAT-exempted annual turnover limit beyond Tk 3 million.
“The new ceiling will be fixed in a day or two,” he said.
After the exemption threshold, businesses, registering turnover of up to Tk 8 million a year, now pay 3 percent tax. In the new fiscal year, the threshold will be raised to Tk 12 million or above, and the tax rate will be reset at 4-5 percent, according to Muhith. “It means we are providing special exemptions to small businesses.”
Muhith said 25,000 to 26,000 businesses out of 800,000 registered for VAT pay the value added tax now.
“We will double the number to 50,000 in the next fiscal year,” he said. The finance minister claimed prices should not rise under the current VAT structure. “The businesses have raised the prices a bit for Ramadan. This has nothing to do with VAT.” He also claimed prices did not rise after any budget he announced under the Awami League government. He is scheduled to place the proposed budget for fiscal 2017-18 in parliament on June 1. The government wanted to implement the Value Added Tax and Supplementary Duty Act of 2012 from July 1 last year but shelved the plan following intense protests by trade bodies.
The rates of package VAT were raised instead. The new law keeps the VAT rate flat at 15 percent, eliminating different slabs.
Since then, the finance minister has been saying the law will be implemented from July 1 this year.
But when the businesses threatened to demonstrate against the plan again, Muhith said a reduced but uniform tax rate would be finalised on Thursday or Friday. He met Prime Minister Sheikh Hasina to discuss the new rate on Thursday.
