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Muhith sticks to 15% VAT rate

  • Published at 12:13 am April 18th, 2017
  • Last updated at 12:15 am April 18th, 2017
Muhith sticks to 15% VAT rate
Finance Minister AMA Muhith categorically said the value-added tax rate will be 15% for all sectors and there will be no change to this rate. He expressed the determination about implementing the rate against opposition by the business community. “I will say two things on the VAT issue. First, the new VAT law will be effective from July 1 and second, the VAT rate will be 15%,” finance minister told journalists on Monday. He came up with the remarks following a meeting with top business leaders of the country. FBCCI First Vice President Shafiul Islam Mohiuddin said they had demanded the VAT rate be set at 10% instead of the proposed 15%. He hoped finance minister would consider their demand and make a decision after talks with the business leaders. Mohiuddin said the country has a total number of 22.4m businesspeople and most of them, who are marginal, will be severely affected by the 15% VAT. Commerce Minister Tofail Ahmed said the government is trying to solve the matter in a “rational way.” “Interest of the stakeholders will be taken into consideration.” The meeting sources said it was discussed that if the reduction of VAT rate will impact the government revenue earning plan. According to the finance ministry proposal, 15% VAT will be applicable for the businesses which have annual Tk80 lakh or more turnover. But the business leaders want the rate should be imposed if the turnover is Tk5 crore or more. Business leaders said 15% VAT will increase the price by 45% at consumer level. The assessments of business community and think-tanks about the impact of 15% VAT on consumer level were also discussed at the meeting. The country’s top trade body FBCCI recently said implementation of new VAT law would be suicidal if the seven-point demand put forward by business groups is not taken into consideration. Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Metropolitan Chamber of Commerce and Industry (MCCI) and other business organisations warned that unless the government pays heed to their demand, implementation of the new VAT law would be at stake. The business groups have demanded sector-wise VAT rate instead of uniform 15% VAT with implementation of new VAT and Supplementary Duty Act 2012 that is scheduled to come into effect from July 1 this year. With implementation of new VAT law passed in 2012, the existing square foot-based package VAT would be abolished. After several deferrals on the implementation date, the government is now planning to implement the new act from July 1, 2017. But IMF urged the government not to delay further the implementation of  new VAT law, said Muhith.