DHAKA: Bangladesh government is going to end a dispute between the business community and the International Monetary Fund over the implementation of the new VAT law.
Some minor changes will be brought to the law, which will be acceptable to both the IMF and the business community, Finance Minister AMA Muhith said here the other day.
A government committee on the VAT law has finalised its report and the finance minister held a meeting with the committee.
Muhith said they will invite an IMF mission to Dhaka in February. After talks with the IMF, the ministry will issue an official order on the implementation of the VAT law, the minister said.
“After that, there will be no problem in getting the rest of the ECF [Extended Credit Facility] loans,” Muhith said.
The IMF had deferred the release of the sixth instalment of the $1 billion loan last year after the government failed to lay out a fresh roadmap for implementing the new VAT law.
The government is introducing the new VAT law at the prescription of the IMF, but businesses earlier said their recommendations and concerns were not reflected in the law.
The sixth instalment — around $140 million — was scheduled for release in November last year.
The IMF had tagged a condition that the government would have to issue a formal notice announcing the rollout of the VAT law in July 2016. The lender said the sixth and the last instalments would be released together in April this year.
The government had earlier committed to the IMF that the new VAT law would come into effect in July 2015, but due to opposition by influential ministers and the business community, the government had pushed it back to July 2016.
The government last year formed the committee on the VAT law with NBR member Ali Ahmed as its head which included representatives of the business community.
Muhith said the report submitted by the committee recommended some minor changes in the VAT law. He said the changes would be acceptable to the IMF.
Businesspeople will not have any objection if the VAT law is implemented after bringing the recommended changes, he said.
“Businesses also do not want any conflict with the IMF.”
The VAT law has two important features — a uniform rate of 15 percent and elimination of various complications like truncated base, tariff value exemption and so on — that would simplify the VAT collection process and make it more transparent.
The existing VAT law was introduced in 1991 and has gone through many changes on an ad-hoc basis.
