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Tofail: Businesses will be happy about new VAT rate

  • Published at 12:22 am May 17th, 2017
  • Last updated at 12:23 am May 17th, 2017
Tofail: Businesses will be happy about new VAT rate
Commerce Minister Tofail Ahmed has said some decisions on VAT, Customs and Income Tax have been taken for the next fiscal year budget at a meeting held in the Prime Minister’s Office recently. “I hope local businessmen will definitely be happy about the decision as the premier has given her opinion in this regard,” he said. Tofail was briefing a group of journalists at his secretariat office on Tuesday. But he declined to reveal the decisions. Asked about the possible VAT rate, he said: “It is not possible to disclose about the decisions ahead of the next fiscal year budget announcement which is supposed to be placed on June 1.” In reply to a query, commerce minister said he was not assigned to settle the VAT issue by the premier. “It is not true that prime minister had asked me to settle the VAT issue with businessmen.” Finance Minister AMA Muhith is now visiting Middle East and the prime minister will also go there, and after their return, they will fix the VAT rate after May 20, he said. Seeking anonymity, a highly credible source at the meeting at the PMO told the Dhaka Tribune: “Prime Minister Sheikh Hasina has directed the NBR to reduce VAT from the 15% flat rate, considering the interest of local industry.” The premier also asked for increasing VAT-free turnover limit for small businesses to Tk36 lakh from Tk30 lakh in the new law to be effective from July 1, 2017. In the meeting, the NBR has been directed to increase the number of products to over 550 to impose Supplementary Duty in order to protect domestic industry. Earlier, the analysts said implementation of new VAT law at a flat rate of 15% would increase the living cost as it will hike the prices of essentials due to multi-stage payment of tax from production level to retailing. Amid a wide range of criticism and opposition from business people, the Value Added Tax (VAT) Act 2012 will be effective from July 1 at a flat rate of 15% for almost all products. The manufacturers of products will enjoy rebate by showing previous vouchers or records. In line with the new law, all business transactions will be under the VAT net except education, lifesaving drugs and essential commodities, but the NBR is yet to clarify those exceptions. “Prices of finished goods have soared immediately, affecting the living expenses of consumers as they have to pay 15% VAT,” Former finance adviser to caretaker government AB Mirza Azizul Islam told the Dhaka Tribune. Though manufacturers would get rebate on purchase of raw materials, it would hardly benefit consumers, he said. “I think VAT rate should be 10% in Bangladesh as most countries in the region have below 15%.” Azizul suggested considering the rate based on per-capita income.