A committee of National Board of Revenue has recommended withdrawal of VAT-free turnover limit of Tk 36 lakh for small traders under the new VAT law, which has remained suspended.
As per recommendation of the committee, there should not be VAT exemption for any businesses and all should pay VAT, if necessary, at a minimum rate, officials said.
The committee headed by Dhaka Customs House commissioner Abdul Mannan Sikder submitted the report to NBR chairman Md Mosharraf Hossain Bhuiyan in the past week.
It also recommended introducing truncated value-based value-added tax rates instead of multiple VAT rates under the new VAT law.
There should not be any package VAT and tariff value system, the two provisions of existing VAT Act-1991, it said.
The new law offered VAT exemption on turnover up to Tk 36 lakh scrapping the package VAT and tariff value system.
NBR on November 11 formed the committee to identify the challenges in implementation of the VAT and Supplementary Duty Act-2012, known as new VAT law, and make recommendations on possible way out.
As NBR obtained recommendations of its committee, the revenue board has convened a meeting with Federation of Bangladesh Chambers of Commerce and Industry on today (Wednesday) to get the recommendations of the business community on the implementation of the law.
At the meeting, NBR will seek proposals of the apex trade body on probable amendments to the law, implementation of the VAT automation and improvement of efficiency of VAT administration, officials said.
They said that the VAT authorities might also seek opinion of the trade body on the recommendations of the NBR committee.
The government at the budget session of the parliament in 2017 suspended the implementation of the law for two years until June 2019 following strong opposition from traders on various provisions of the law including single 15 per cent VAT rate on all goods and services.
NBR is now preparing to implement the new law with multiple VAT rates from next July as per decision of the government.
The government has already announced its decision to introduce multiple VAT rates, scraping single rate, under the law.
Members of the committee and officials of NBR on Tuesday said that the committee considered truncated value-based VAT rates would be more suitable to protect revenue interest of the government as it would not allow businesses to receive any rebate on previously paid VAT at various stages of a supply chain.
On the other hand, multiple VAT rates allow traders to take rebate on previously paid VAT, they said.
Under the truncated based value system, the VAT authorities determine the rate of value addition based on pre-determined truncated base price of goods and services for imposing VAT at 15 per cent.
But, the net VAT rate actually comes down due to lower base prices of goods and services.
For example, currently, a general type restaurant without air-conditioned facility pays 15 per cent VAT on 50 per cent of its total receipts. It means the net VAT rate stands at 7.5 per cent of 100 per cent sales.
NBR collects truncated value-based VAT from very few sectors.
The committee has also recommended making separate BIN, known as VAT registration number, mandatory for every branch of a company as stated in the existing VAT Act-1991, commonly known as old VAT act.
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