Businesses may enjoy a higher ceiling of turnover tax while some price-sensitive items are set to be fully exempt from VAT under a new law.
The National Board of Revenue (NBR) is exploring the possibility of granting the two relaxations to the businesspeople and consumers respectively under the new Value Added Tax (VAT) and Supplementary Duty (SD) Act 2012 set to come into force from next July.
The move was made in a recent meeting where VAT officials decided to discuss the issues with the businesspeople and explore the possibility of an upward adjustment to the turnover- tax ceiling.
As per the proposed differential treatment in taxing, businesses having annual turnover from Tk 3.0 million to Tk 8.0 million will have to pay 3.0 per cent turnover tax.
And those having annual turnover above the Tk 8.0-million mark will have to pay 15 per cent VAT.
The issues associated with review of the ceiling have been discussed in the strategic planning exercise (SPE) with the VAT officials in Cox's Bazar where they and stakeholders scrutinized the pros and cons of the new VAT law.
Three sub-groups-Automation, Organisation and Law and Rules Matter-were formed on the occasion to do the groundwork in the run-up to execution of the law from July 01, 2017.
The VAT department assigned the VAT online project (VOP) to the task of examining the matters.
In the new VAT law, there will be a uniform VAT rate of 15 per cent for all businesses. However, small businesses having business turnover up to Tk 3.0 million will be fully exempt from this tax.
Business community suggested introduction of multiple rates of VAT instead of the single rate in fear of a "significant hike in prices of products".
VAT officials said the new law has a provision of 'input credit system' under which tax burden will be less on consumers.
In the SPE meeting, the tax authority decided to find out some of the sensitive products to offer waiver so that consumers can get those at cheaper rates sans VAT.
The government has decided to replace the existing VAT and SD Law 1991 with the new one following its distortion due to so many changes and amendments.
Price-declaration and-approval system, truncated-based value, tariff value, package VAT, large base of tax exemption, advance payment of tax with the current account etc have been identified as shortcomings in proper enforcement of the existing VAT law.