Supplementary duty, VAT ‘to be reshuffled soon’

The government is planning to reshuffle the supplementary duty (SD) on some sectors, including tobacco, mobile services and reconditioned cars, and the value-added tax (VAT), in the new relevant law.
Sources at the National Board Revenue (NBR) said the sectors that had been paying VAT at a flat rate of 15 per cent over the years have contributed more than 40 per cent of overall indirect taxes. 
The government will incur a significant amount of revenue losses after the reduction in the VAT rate from 15 per cent, stipulated in the new VAT and Supplementary Duty Act, 2012, which is scheduled to come into force from July 1 this year. 
Sources also hinted that the uniform VAT rate is likely to be fixed at 12 per cent in the VAT law, to be revised in the budget session. 
Finance minister AMA Muhith has already announced that the VAT rate would be reduced following strong protests by the business community. 
Currently, all sectors—except 15 services and 70 products which pay VAT on truncated value or tariff value—come under 15 per cent VAT rate under the existing law. 
A reduction in the rate by 1 per cent may lead to a revenue loss of Tk. 4,000 crore a year, Muhith said. 
Officials said the imposition of additional SD would offset the loss. 
SD may be imposed proportionately in line with the reduced VAT rate or at one per cent higher than the reduced rate, they said. 
Currently, supplementary duty in the range of 30 per cent to 65 per cent is applicable on cigarettes and bidis, based on price slabs, while 100 per cent SD is applicable to zarda and gul. 
On the other hand, a 5 per cent SD is applicable to mobile services including talktime, internet use and others. 
They said the revenue board was examining the possibility to impose the SD on some other sectors like gas and cement. 
Sources said the SD at a local stage was usually imposed on goods and services considered hazardous to health and/or luxury items. 
The NBR has proposed to reshuffle the SD over 700 products. The finance minister has already given his approval. 
The NBR placed its proposal, keeping in mind the necessity to save the local industries, and discourage imports of products produced in Bangladesh. 
The SDs are to be increased on items that generate large amounts of revenue. Cigarettes and the use of mobile phones are the two sectors that provide more than one-third of total revenues. 
NBR sources said the SD would also be reshuffled on the basis of vehicular CC. NBR will reduce SD from 45 per cent to 30 per cent on import of 1000-CC reconditioned cars. 
However, it will increase SD by 200 to 250 per cent on 2001 CC to 2750 CC and it would reduce SD to 30 from 40 per cent of microbus. It also proposed imposing SD by 20 to 25 per cent on auto-rickshaws and three-wheelers with two- or four-stroke engines. 

Supplementary duty, VAT to be reshuffled soon

The government is planning to reshuffle the supplementary duty (SD) on some sectors, including tobacco, mobile services and reconditioned cars, and the value-added tax (VAT), in the new relevant law. Sources at the National Board Revenue (NBR) said the sectors that had been paying VAT at a flat rate of 15 per cent over the years have contributed more than 40 per cent of overall indirect taxes. The government will incur a significant amount of revenue losses after the reduction in the VAT rate from 15 per cent, stipulated in the new VAT and Supplementary Duty Act, 2012, which is scheduled to come into force from July 1 this year. Sources also hinted that the uniform VAT rate is likely to be fixed at 12 per cent in the VAT law, to be revised in the budget session. Finance minister AMA Muhith has already announced that the VAT rate would be reduced following strong protests by the business community. Currently, all sectorsexcept 15 services and 70 products which pay VAT on truncated value or tariff valuecome under 15 per cent VAT rate under the existing law. A reduction in the rate by 1 per cent may lead to a revenue loss of Tk. 4,000 crore a year, Muhith said. Officials said the imposition of additional SD would offset the loss. SD may be imposed proportionately in line with the reduced VAT rate or at one per cent higher than the reduced rate, they said. Currently, supplementary duty in the range of 30 per cent to 65 per cent is applicable on cigarettes and bidis, based on price slabs, while 100 per cent SD is applicable to zarda and gul. On the other hand, a 5 per cent SD is applicable to mobile services including talktime, internet use and others. They said the revenue board was examining the possibility to impose the SD on some other sectors like gas and cement. Sources said the SD at a local stage was usually imposed on goods and services considered hazardous to health and/or luxury items. The NBR has proposed to reshuffle the SD over 700 products. The finance minister has already given his approval. The NBR placed its proposal, keeping in mind the necessity to save the local industries, and discourage imports of products produced in Bangladesh. The SDs are to be increased on items that generate large amounts of revenue. Cigarettes and the use of mobile phones are the two sectors that provide more than one-third of total revenues. NBR sources said the SD would also be reshuffled on the basis of vehicular CC. NBR will reduce SD from 45 per cent to 30 per cent on import of 1000-CC reconditioned cars. However, it will increase SD by 200 to 250 per cent on 2001 CC to 2750 CC and it would reduce SD to 30 from 40 per cent of microbus. It also proposed imposing SD by 20 to 25 per cent on auto-rickshaws and three-wheelers with two- or four-stroke engines.