Government's revenue authority is conducting mock execution of a new VAT law that provides for controversial online payment of the tax at a flat rate of 15 per cent for all -- be they big or small.
Officials said a set of pilot tests, as prelude to enforcement of the VAT and Supplementary Duty Act 2012 from next year, had been run to see impact of the law on businesses and field-level tax officials.
The new law is scheduled to take effect from July 01, 2017 by replacing the existing VAT law-1991.
The VAT Online Project (VOP) under the National Board of Revenue (NBR) recently carried out load test of the new law by creating 60,000 virtual users. The provisions of the new law have been enforced on the users to monitor its impact on them. "The load test has proved successful," said a senior official of the VOP.
Two Users acceptance Tests (UTs) were also done to see whether the VAT online system is developing as per law.
In the first phase, 18 VAT officials of joint commissioner and assistant commissioner levels and 12 taxpayers attended the UT.
The VOP arranged the second phase of UT only for field-level VAT officials where many suggestions came up for improving upon the system. Software-developing Vietnamese company FPT has been improving the VAT online system in accordance with the recommendations of the field-level VAT officials, the official said.
The company has submitted a report with the update of the software development in line with the proposals came up in the UT, he said.
"Some of complaints of the field-level offices were addressed immediately while the rest kept for further enhancement," he added.
Integration with the National Identification Number and bank account number with the VAT online system has been left over for further enhancement.
Currently, the VOP is ready for providing online business-identification number (BIN) and issuance of BIN certificate.
As per a recently approved project-implementation proposal (PIP), the VOP is set to invite application for online BIN registration from November 25, 2016.
From January, the VOP will develop its system to cancel VAT registration.
The VAT online system is being developed under SEP software. The Vietnamese company, FPT, is the licence-holder of SEP.
Meanwhile, VOP will get technical support from two SEP expert of the World Bank (WB) who will monitor smooth usability of the VAT online software. The government has allocated Tk 5.56 billion for the VOP project. Of the funds, the WB assured providing $60 million as DLR at 0.5 per cent interest rate.
Officials said the NBR has been carrying out motivational programmes across the country to make different stakeholders aware about the implications of the new law.
The new VAT law has faced stiff opposition from the business community as they demanded multiple-rate VAT instead of flat rate of 15 per cent, continuation of package VAT, tariff value, and truncated-base VAT for survival of small business.
VOP officials said small businesses having annual turnover of up to Tk 3.0 million will be totally exempt from payment of VAT in the new law. Currently, all types of businesses are bound to pay VAT.
In the new law, businesses will be able to claim tax rebate on the raw materials that they purchase by paying VAT. Businesses will have to keep recorded account transaction under the new law. Tax incidence will be reduced significantly under the input credit system.