NBR asked to start talks with trade leaders over VAT dispute
The government would provide 20,000 electronic cash register (ECR) machines to traders at subsidized rate and start fresh dialogue with them to solve disputes over Value Added Tax related issues including restoration of package VAT system in the new law, officials said.
The decisions were taken at a meeting between finance minister AMA Muhith and tax officials led by national board of revenue chairman Md Nojibur Rahman at the secretariat on Tuesday.
Officials attending the meeting said providing ECRs at subsidized rate would encourage businessmen to install the machines at their sales centres.
The current market price of most updated ECR ranges from Tk 20,000 to Tk 25,000, they said.
The government has been trying to convince the businessmen to install ECRs in a bid to check widespread evasion of VAT.
While observing a day-long strike on November 2, the capital’s small businessmen and shop owners announced that they would intensify their movement from November 20 unless their demands including reduction of the amount of package VAT for the current fiscal year and restoration of the system permanently in the law were met.
The NBR officials said that the finance minister instructed them to solve the crisis through discussions with the trade leaders. Muhith also asked the field level VAT officials to go slow in enforcement of existing VAT act of 1991 related to unearth VAT evasion, they said.
On November 10, Muhith rejected the Dhaka Chamber of Commerce and Industry’s demand to reduce the proposed 15 per cent rate of VAT to be realized from June 2017. The DCCI also demanded for reducing the proposed VAT rate of Tk 7,000 and Tk 28,000 on small businessmen in the current fiscal year.
Officials said the NBR officials argued during the meeting that the demand by small and medium businesses for restoration of package VAT system should not be met.
There will be no package VAT system under the new VAT and Supplementary Duty Act-2012 which is scheduled to come into effect from July, 2017.
The NBR fixed package VAT at the highest Tk 28,000 for businesses located at Dhaka and Chittagong city corporation areas with monthly value-addition up to Tk 15,555 or annual sales up to Tk 7 lakh for the current fiscal uear.
But many shopkeepers of Basundhara Shopping Complex, Dhaka New Market and Jamuna Future Park were also demanding for paying package VAT although their annual sales volume is much higher, according to a NBR position paper presented at the meeting.
According to the rules of the NBR, those shops don’t fall under package VAT system in anyway.
The annual collection of package VAT is also very insignificant, said the paper.
Package VAT system is also a hindrance to improving tax-GDP ratio in the country.
Regarding turnover VAT facility for manufacturers in Dhaka and Chittagong, the paper said that a manufacturing unit in the areas would not be able to survive considering the costly space rent, salaries, utility bills and other costs if its annual turnover remains below Tk 80 lakh, the bench mark for allowing turnover VAT facility.
The NBR also gets only Tk 4 crore annually as turnover VAT which indicates a huge evasion in the sector, the paper stated.
Other demands of the forum are also not consistent with the new VAT act, it said.
Officials of the NBR told New Age that they were also unearthing huge VAT evasion by traders who were currently either paying package VAT or turnover VAT.
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