The government is likely to backtrack on its decision to implement a 2012 law on value added in its entirety with a uniform 15 per cent VAT on all goods and services in the wake of massive criticism.
The proposed uniform VAT rate might be lowered substantially in addition to retaining 5 per cent VAT on electricity, said officials close to finance minister AMA Muhith.
They said that the decisions were made during a meeting between prime minister Sheikh Hasina and Muhith on the implementation of the Value-Added Tax and Supplementary Duty Act 2012 in Jatiya Sangsad building.
The officials said that the meeting discussed various aspects of the proposed
budgetary measures on VAT and alternative options like postponing the complete implementation of the law and retaining multiple rates of VAT.
The prime minister directed the finance minister to take affective measures for the ‘interest of people’ after reviewing the alternatives measures, they said.
National Board of Revenue member Rezaul Hasan, also VAT Online Project director, said that they had prepared alternative options and their impacts on revenue generation for the crucial meeting.
He said that they would be clear about the new shape of the VAT law by June 22.
Although the law was enacted in 2012, the government could not implement the major features of the law due to protests from businesses and lack of consensus on the proposed rate of VAT.
Businesses are demanding fixing the uniform rate of VAT at 12 per cent.
The revenue board in its exercise reviewed alternatives option including incorporation of multiple VAT rates, continuation of tariff value and other issues in the law and possible changes in the VAT online system as well as estimated time for accommodating those changes in the system.
The board also analysed the impact on revenue mobilisation in case of backtracking on the implementation of the proposed budgetary measures on VAT.
The government has already announced that it would backtrack on proposed higher rate of excise duty on bank deposits in the face of bitter criticisms.
On Sunday, Muhith said that he would cut down the proposed hike in excise duty when the national budget for 2017-18 would be passed in parliament on June 28.
He said that he confirmed the decrease in excise duty in advance for the comfort of the people.
In the proposed budget, Muhith proposed that the excise duty would be increased to Tk 800 from Tk 500 for depositors of Tk 1-10 lakh, Tk 3,000 for depositors of Tk 10 lakh to Tk 1 crore, Tk 15,000 for depositors of Tk 1 crore to Tk 5 crore and Tk 30,000 from depositors of Tk 5 crore and above.
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