The National Board of Revenue plans to sit with businesses to resolve disputes related to the new VAT and Supplementary Duty law to ensure implementation of the law from July next year, officials said.
“We will have close and in-depth discussion with businessmen by the end of August,” NBR Chairman Md Nojibur Rahman told The Daily Star.
The revenue authority takes the initiative after the government backtracked on its plan to enforce the new VAT law from the start of the current fiscal year amid resistance from businesses and a section of revenue officials and inadequate preparation by the NBR.
The law to be implemented under an automated platform envisages a 15 percent flat VAT instead of various types of VAT rate now in effect under the VAT Act 1991.
The Federation of Bangladesh Chambers of Commerce and Industry has long been demanding inclusion of its recommendations in the new law.
The apex trade body says businesses, particularly small and medium enterprises, will be affected if the law is implemented without addressing their concerns.
The FBCCI demands inclusion of the recommendations of a panel formed by the government in 2014 with representatives from businesses and the NBR.
The panel suggested multiple rates of VAT on goods and services instead of the universal rate of 15 percent.
The government formed the committee to review the law in the face of criticism from businesses that their recommendations and concerns were not reflected in the VAT law.
The FBCCI in its recommendations demanded reduction of the turnover tax rate to 0.5 percent from 3 percent and raising the upper limit of annual turnover for firms to Tk 5 crore from Tk 80 lakh.
“We will sit with them to discuss their proposals and decide which proposals are acceptable and which are not,” said a senior official of NBR, asking not to be named.
“We want to come to a decision to ensure that the law is implemented in the next fiscal year without any confrontation.”
He said the new law may need amendment after consultation with businesses.
“We want to be fully ready with everything by December this year.”
To start implementing the law, the NBR plans to launch online registration of business identification numbers (BINs) for firms in August.
Once the new VAT law comes into effect, firms will have to get nine-digit BINs by signing up online, which will replace the present 11-digit ones.
The official said there are 840,000 BINs in the NBR database and many of those are fake and inactive.
The fresh BINs will enable the revenue authority to get the actual number of VAT payable entities.
The NBR also plans to start testing the online return filing system from October this year as part of its preparation to introduce an online VAT system under the new law.
The VAT law passed in parliament in 2012 was initially scheduled to be implemented from July 2015. Framed at the prescription of the International Monetary Fund, the new law is expected to boost the state's revenue collection, curb corruption and tax evasion and improve transparency in the VAT administration.
The government with the support from the World Bank is now implementing a Tk 551 crore project to develop an automated VAT system to enforce the new law.
The automation will reduce both administration and compliance costs as businesses will be able to file returns and pay taxes online.
But there are concerns that the implementation of the new law with a 15 percent VAT rate may fuel the cost of living because of the hike in prices of many goods and services, according to a paper prepared by the NBR early this year.
The abolition of VAT exemption for nearly 2,000 products and services, and the end of tariff or administered value of nearly 85 products as well as the truncated system are likely to impact consumers.
The implementation of the law may also reduce competitiveness of various domestic industrial sectors due to trimming of the list of items that face supplementary duty at the import stage, it observed.
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