Muhith adamant on 15pc VAT

Finance minister AMA Muhith yesterday took a U-turn, deciding to retain the existing 15 per cent value added tax (VAT) in the next budget, though he had promised to reduce it and issue a public circular. “The 15 per cent uniform VAT will not affect the prices of essentials, as many necessary items will be kept out of its purview,” he said.
Muhith said the VAT rate would remain unchanged since it has been continuing for a long time. “I could reduce VAT very nominally but it would create a big problem,” he added.
Responding on a question regarding the size of the next budget, he said it will be a little over Tk. 4 lakh crore. “I will not disclose the exact figure,” he said, adding, “We will increase the allocation for human resources development in the budget compared to previous years. But the allocation for the agricultural sector will remain the same.”
The government’s biggest credit was that the budget had increased to Tk. 4 lakh crore from Tk. 95,000 crore, Muhith said.
He hoped the budget would reach Tk. 5 lakh crore the next time.
Meanwhile, the government was about to reduce corporate tax by 2 per cent in the upcoming budget in a bid to attract investment and provide benefits to the business community.
The government is yet to finalise a uniform VAT rate, which is to become effective from July 1, according to the sources at the National Board of Revenue (NBR).
Earlier, the trade bodies proposed a reduction in the VAT rate to 7 per cent from 15 per cent and the corporate tax rate for commercial banks to 35 per cent from the existing 37.5 per cent, to 30 per cent from 35 per cent for non-public trading companies, to 22.5 per cent from 25 per cent for public trading companies, and to 32.5 per cent from 35 per cent for brokerage operations.
Meanwhile, the government plans an ambitious revenue collection target at Tk. 2,48,190 crore for the NBR for the next fiscal year 2017–18.
The target for the new fiscal year is more than 34 per cent or Tk. 63,190 crore higher than the revised target of Tk. 1,85,000 crore set for the current FY 2016–17.
NBR chairman Nojibur Rahman told The Independent that they were yet to reach a consensus on the uniform VAT rate, though NBR sources had hinted that the uniform VAT rate was likely to be fixed at 13 per cent in the VAT law, which is to be revised in the budget session. Besides, the government will incur a
significant amount of revenue loss 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.
It is expected that the government will reshuffle the supplementary duty (SD) on some sectors, including tobacco, mobile services and reconditioned cars, and the VAT, in the new relevant law.
Currently, all sectors—except 15 services and 70 products that pay VAT on a truncated value or tariff value—come under the 15 per cent VAT rate under the existing law.
 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 to 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.
The SDs are to be increased for 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. The NBR will reduce SD from 45 per cent to 30 per cent on the import of 1,000 cc reconditioned cars.
However, it will increase SD by 200 to 250 per cent on 2,001 cc to 2,750 cc and it would reduce SD to 30 from 40 per cent for microbuses. It also proposed imposing an SD of 20 to 25 per cent on auto-rickshaws and three-wheelers with two- or four-stroke engines.
NBR sources said if the uniform VAT rate, SD, and sector-wise revenue target could be fixed, the proposal would be sent to the printing press by Monday.

 

Muhith adamant on 15pc VAT

Finance minister AMA Muhith yesterday took a U-turn, deciding to retain the existing 15 per cent value added tax (VAT) in the next budget, though he had promised to reduce it and issue a public circular. The 15 per cent uniform VAT will not affect the prices of essentials, as many necessary items will be kept out of its purview, he said. Muhith said the VAT rate would remain unchanged since it has been continuing for a long time. I could reduce VAT very nominally but it would create a big problem, he added. Responding on a question regarding the size of the next budget, he said it will be a little over Tk. 4 lakh crore. I will not disclose the exact figure, he said, adding, We will increase the allocation for human resources development in the budget compared to previous years. But the allocation for the agricultural sector will remain the same. The governments biggest credit was that the budget had increased to Tk. 4 lakh crore from Tk. 95,000 crore, Muhith said. He hoped the budget would reach Tk. 5 lakh crore the next time. Meanwhile, the government was about to reduce corporate tax by 2 per cent in the upcoming budget in a bid to attract investment and provide benefits to the business community. The government is yet to finalise a uniform VAT rate, which is to become effective from July 1, according to the sources at the National Board of Revenue (NBR). Earlier, the trade bodies proposed a reduction in the VAT rate to 7 per cent from 15 per cent and the corporate tax rate for commercial banks to 35 per cent from the existing 37.5 per cent, to 30 per cent from 35 per cent for non-public trading companies, to 22.5 per cent from 25 per cent for public trading companies, and to 32.5 per cent from 35 per cent for brokerage operations. Meanwhile, the government plans an ambitious revenue collection target at Tk. 2,48,190 crore for the NBR for the next fiscal year 201718. The target for the new fiscal year is more than 34 per cent or Tk. 63,190 crore higher than the revised target of Tk. 1,85,000 crore set for the current FY 201617. NBR chairman Nojibur Rahman told The Independent that they were yet to reach a consensus on the uniform VAT rate, though NBR sources had hinted that the uniform VAT rate was likely to be fixed at 13 per cent in the VAT law, which is to be revised in the budget session. Besides, the government will incur a significant amount of revenue loss 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. It is expected that the government will reshuffle the supplementary duty (SD) on some sectors, including tobacco, mobile services and reconditioned cars, and the VAT, in the new relevant law. Currently, all sectorsexcept 15 services and 70 products that pay VAT on a truncated value or tariff valuecome under the 15 per cent VAT rate under the existing law. 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 to 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. The SDs are to be increased for 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. The NBR will reduce SD from 45 per cent to 30 per cent on the import of 1,000 cc reconditioned cars. However, it will increase SD by 200 to 250 per cent on 2,001 cc to 2,750 cc and it would reduce SD to 30 from 40 per cent for microbuses. It also proposed imposing an SD of 20 to 25 per cent on auto-rickshaws and three-wheelers with two- or four-stroke engines. NBR sources said if the uniform VAT rate, SD, and sector-wise revenue target could be fixed, the proposal would be sent to the printing press by Monday.