The business community has shut down their shops for an hour today and held human chains across the country in protest of the proposed VAT law, which is scheduled to be enacted from July 1, 2016.
“Both businesses and the National Board of Revenue (NBR) will ‘fall into chaos’ if 15 percent VAT is imposed from the coming fiscal“, they said to bdnews.
The retailers and participants of the human chain demanded the prime minister’s intervention for incorporating the package VAT system, currently in effect, into the new VAT law. The package VAT system imposes a fixed rate on businesses instead of taxing them on individual sales.
The Consumers Association of Bangladesh (CAB) is also worried that the plan will raise prices of everyday necessities. Besides, the Federation of Bangladesh Chambers of Commerce and Industry said it would be tough for businesses to comply with various provisions of the new law.
“15% is very high and Bangladesh is not Malaysia, not even Thailand. The rate is 6% in Malaysia and 7.5% in Thailand. But why Bangladeshi people will pay 15% VAT?”
– FBCCI President Abdul Matlub Ahmad.
The trade body requested the National Board of Revenue (NBR) to reduce Value Added Tax rate to 7% from existing 15%.
The new VAT law will come into effect from July 1 this year, the start of the new fiscal year.
The parliament in 2012 passed the Value Added Tax and Supplementary Duty Act to automate the overall VAT administration to increase the revenue collection.
Following the initiative, the taxes authorities in 2013 undertook the VAT Online Project to ensure a client-friendly and a service-oriented automated system.
The NBR is scheduled to start online VAT registration from July 1, 2016 and is expected that the all procedures including registration, payment, return filing, refund, legal actions under new VAT act will go online.
The new Value Added Tax and Supplementary Duty Act 2012 will have no provisions for package VAT or truncated value-based VAT system. With the introduction of the law, all level of businesses have to pay a unique and a single VAT rate at 15%.