|Published : 20 Sep 2016, 23:14:04|
Making new VAT law soft, slightly
The new VAT law intends to bring about major changes in the revenue collection and maintenance of records by both taxpayers and taxmen. It does put extra emphasis on making the system hassle-free for taxpayers through automation
It is difficult to make any guess at this moment about the response of the businesses to the taxmen's reported move towards relaxations in some selected areas under the new value added tax (VAT) and supplementary duty (SD) law. But it should certainly be considered a well-intended one. The relaxation would, at least, partially remove worries of both businesses and consumers. The National Board of Revenue (NBR), according to a report published in this paper last Monday, is now exploring the possibility of levying 3.0 per cent tax on businesses with annual turnover between Tk 3.0 million and Tk 8.0 million. Under the new VAT law, scheduled to be made effective from the first day of the next fiscal year (FY), 2017-18, annual turnover up to Tk 3.0 million is exempted from tax and a uniform rate of 15 per cent will be applicable to turnover above that amount.
One of the major demands of the trade bodies has been the introduction of multiple VAT rates for turnover and various products and services. The government and other stakeholders had held several rounds of discussions to iron out differences. Some amendments to the original law have been made in the light of the discussions, but businesses are still not entirely happy. The government, too, had limitations as far as the matters concerning framing the new VAT law are concerned. It has earlier made commitment to the International Monetary Fund (IMF) to make the VAT law time-befitting and mobilise the maximum possible amount of revenue from this form of taxation. Undeniably, with revenue earning from imports becoming virtually stagnant in recent years and income tax growing at a slow pace, the VAT that is collected at the stage of import and domestic production or service-provision, remains the most potential vehicle for mopping up higher volume of revenue for the government.
If the proposed change in turnover tax finally gets through, the businesses' demand for multiple VAT rates would be fulfilled, at least, partially. The NBR is, reportedly, mulling over exempting a few 'price-sensitive' items from VAT to provide relief to the consumers. In fact, any hike in VAT, which is an indirect tax, is passed on to the consumers, who do not have organisations of their own to vent anger. There are, however, a few organisations in both private and public sectors to 'safeguard' the rights and interest of the consumers. But when VAT rates are hiked, the relevant public sector entities prefer to gloss over the matter. And the private ones are weak and less vocal.
The new VAT law intends to bring about major changes in the revenue collection and maintenance of records by both taxpayers and taxmen. It does put extra emphasis on making the system hassle-free for taxpayers through automation. However, it is alleged that a section of incompetent and unscrupulous tax officials are also not comfortable with the level of transparency and accountability that the new law aims to ensure in the areas of VAT collection. Notwithstanding such problems, the government will hopefully be able to give effect to the new piece of legislation in accordance with its earlier announced schedule. Any opposition to such law coming from the businesses is expected to be addressed through discussions. A uniform VAT rate at 15 per cent on all products and services would surely hurt the consumers most. And it is the job of the government to take appropriate measures to help lessen any adverse load on the consumers because of the overall effect of its VAT-related move.