The government may reduce the rate of package VAT for small and medium traders for the current financial year 2016-17 following demand of the business community.
The National Board of Revenue has decided to cut down the existing amount of package value-added tax and will send a proposal to finance minister AMA Muhith in this regard, NBR officials said.
The revenue board, however, has yet to make any decision on how much the rate, which was made almost double in the budget for the current fiscal year, will be reduced.
The government high-ups will decide it, they said adding that the decision would be finalised soon.
The decision was made following a series of negotiations with agitating traders under the platform of Babosayee Oikkya Forum and the representatives of the Federation of Bangladesh Chambers of Commerce and Industries.
The forum on November 20 postponed their planned indefinite strike demanding setting the package VAT at lower level and restoration of the system in the new VAT law and other issues until December 1 following a meeting with the NBR.
Finance minister in the budget doubled the package VAT and set at Tk 28,000 for traders in Dhaka and Chittagong city corporation areas which was Tk 14,000 in the previous year.
The package VAT for shops in other city corporations was raised to Tk 20,000 from Tk 10,000, at the district town level to Tk 14,000 from Tk 7,500, and at the upazila level the VAT amount was raised to Tk 7,500 from Tk 3,600.
There will be no package VAT system from July, 2017 after implementation of the new VAT act.
The Babosayee Oikkya Forum, a platform of small and medium traders particularly shopkeepers, has been demanding reduction of package VAT for the current fiscal year, restoration of package VAT in the new VAT law and continuation of VAT exemption for biscuit and bread, and rubber-made shoes sectors.
The Federation of Bangladesh Chambers of Commerce and Industries and some other trade bodies also requested the NBR for reduction of the rate.
The tax authorities always opposed the demand of the business community saying that the package VAT system failed to yield potential revenue from the sector.
Traders across the country annually pay only Tk 15 crore to 18 crore as package VAT while a handful number of super shops pay Tk 40 crore, according to the NBR.
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