UNB, Dhaka :
Finance Minister AMA Muhith on Monday said the government would go for imposing one universal rate of VAT, a tax on spending, apparently in compliance with the prescription of the International Monetary Fund (IMF), and look to make it effective from July of 2016.
“Finally we’ve decided that we should go for one rate of VAT,” he told reporters after a team of International Monetary Fund (IMF) headed by IMF Deputy Division Chief of the Asia and the Pacific Department Rodrigo Cubero met him at his Secretariat office yesterday afternoon. He said that a gazette notification would also be provided in this regard.
The Finance Minister said that they had a long discussion with the IMF in the meeting whether there should be one rate or multiple VAT rates.
Following the decision, he said that the obstacles in the ongoing Program with IMF for which disbursement remained stuck, has been cleared and the remaining two installments of the IMF under its extended credit facility (ECF) worth $ 280 million is likely to be disbursed to Bangladesh by this June,
after which the program would be over. The government in November 2012 amended VAT Act-1991 on the IMF prescription for approving U$ 1.0 billion ECF fund.
A government review panel in January 2015 suggested the revenue authority impose multiple VAT rates, instead of the universal 15 percent in all areas, to help flourish micro and small businesses and protect consumers.
The review panel for the law also suggested raising the ceiling of turnover VAT to Tk 36 lakh from Tk 24 lakh to facilitate growth of small and cottage industries, rural enterprises and to reduce hassles of retailers and small businesses.
The nine-member panel, headed by a former National Board of Revenue member, put forward its recommendations to Finance Minister AMA Muhith early January.
The NBR formed the committee with representatives from the business community and the government, as the apex trade body demanded review of the new law before its implementation.
When asked about the supposed opposition of the business community about the one rate of VAT, the Finance Minister said that it was not a point that the committee made so strongly as to put it into the recommendations. “Therefore I don’t see any reason.”
He said that his personal thoughts were that multiple VAT rates would be advantageous. “But, I’ve changed my mind after hearing all the arguments….the commitment is now on one rate.”
The Finance Minister said that the review committee in their report did not recommend more than one rate. “They didn’t make a point that they want multiple rates.”
He, however, said that majority of the countries have multiple VAT rates especially in Europe. Asked whether 15 percent VAT would universal as one rate, Muhith said that it would be known in the budget when the new VAT law would take effect.
Replying to another question on whether the IMF have the authority to prescribe such a thing, he said that IMF is the superintendent of the world financial system, their capacity is restricted to advisory.
But, he said that since the government has program with the IMF, then any kind of deviation from the commitment would have to be done in consultation with them.
Regarding raising the exemption ceiling of turnover VAT to the proposed Tk 36 Lakh from Tk 24 lakh, Muhith said that this is the change that the government is making as per the recommendations of the committee.
Finance Minister AMA Muhith on Monday said the government would go for imposing one universal rate of VAT, a tax on spending, apparently in compliance with the prescription of the International Monetary Fund (IMF), and look to make it effective from July of 2016.
“Finally we’ve decided that we should go for one rate of VAT,” he told reporters after a team of International Monetary Fund (IMF) headed by IMF Deputy Division Chief of the Asia and the Pacific Department Rodrigo Cubero met him at his Secretariat office yesterday afternoon. He said that a gazette notification would also be provided in this regard.
The Finance Minister said that they had a long discussion with the IMF in the meeting whether there should be one rate or multiple VAT rates.
Following the decision, he said that the obstacles in the ongoing Program with IMF for which disbursement remained stuck, has been cleared and the remaining two installments of the IMF under its extended credit facility (ECF) worth $ 280 million is likely to be disbursed to Bangladesh by this June,
after which the program would be over. The government in November 2012 amended VAT Act-1991 on the IMF prescription for approving U$ 1.0 billion ECF fund.
A government review panel in January 2015 suggested the revenue authority impose multiple VAT rates, instead of the universal 15 percent in all areas, to help flourish micro and small businesses and protect consumers.
The review panel for the law also suggested raising the ceiling of turnover VAT to Tk 36 lakh from Tk 24 lakh to facilitate growth of small and cottage industries, rural enterprises and to reduce hassles of retailers and small businesses.
The nine-member panel, headed by a former National Board of Revenue member, put forward its recommendations to Finance Minister AMA Muhith early January.
The NBR formed the committee with representatives from the business community and the government, as the apex trade body demanded review of the new law before its implementation.
When asked about the supposed opposition of the business community about the one rate of VAT, the Finance Minister said that it was not a point that the committee made so strongly as to put it into the recommendations. “Therefore I don’t see any reason.”
He said that his personal thoughts were that multiple VAT rates would be advantageous. “But, I’ve changed my mind after hearing all the arguments….the commitment is now on one rate.”
The Finance Minister said that the review committee in their report did not recommend more than one rate. “They didn’t make a point that they want multiple rates.”
He, however, said that majority of the countries have multiple VAT rates especially in Europe. Asked whether 15 percent VAT would universal as one rate, Muhith said that it would be known in the budget when the new VAT law would take effect.
Replying to another question on whether the IMF have the authority to prescribe such a thing, he said that IMF is the superintendent of the world financial system, their capacity is restricted to advisory.
But, he said that since the government has program with the IMF, then any kind of deviation from the commitment would have to be done in consultation with them.
Regarding raising the exemption ceiling of turnover VAT to the proposed Tk 36 Lakh from Tk 24 lakh, Muhith said that this is the change that the government is making as per the recommendations of the committee.
