Businesses worried over inconsistencies in VAT, Tax14 June 2021
Al Amin :
The businesses are worried over inconsistencies and inequalities in the existing Value-Added Tax (VAT) and Tax laws, despite several steps have been taken in the proposed budget for FY 2021-22 to protect domestic industries.
The businesses and economists said, the country's trade and commerce are passing through a difficult time amid the ongoing Covid-19 pandemic. Many business entities have cut production cost in order to survive.
The SME sector is the worst victim of the pandemic and many entrepreneurs of the sector have been forced to shut down their businesses due to the capital shortage, they said.
"The businesses and the investors will not be interested to invest further, if the existing discrepancies and anomalies are not scrapped immediately," Abul Kasem, Khan, Chairperson of Business Initiative Leading Development (BUILD), told The New Nation.
"Among the inconsistencies, the National Board of Revenue (NBR) collects Advance Tax and VAT, which are supposed to return to the concerned stakeholder after a certain period of time. But the traders are not getting back that timely," he said."As a result, a big amount of capital money has remained unusable for a long time. Although the big traders are capable to adjust the amount, the entrepreneurs of the SME are becoming losers," Kasem, also former president of the DCCI, said.
Besides, an uneven price competition has been created in the local market due to the existing VAT law, as the provisions of the laws are not being implemented equally, said Imran Hasan, Secretary General of the Bangladesh Restaurant Owners' Association.
For an example, the NBR has installed Electronic Fiscal Device (EFD) machines at some business entities across the country, while most of the business entities are out of the machines.
Resulted the users of the EFDs are facing an uneven price competition and are losing customers having high price, Kasem said.
Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), said the government should ensure integrated facilities for all sectors by eliminating existing VAT and tax discrimination in the goods and services sectors.
Three per cent Advance Income Tax should be continued for commercial imports by cancelling maximum 20 per cent AIT imposed on VAT registered industries, he added.
He further said there are taxes at source of different rates at supply and transaction level in 31 sectors. As the tax at source is several times higher than the payable tax on profits, the businesses are sinking into the quicksand of secret transactions.
These should be reduced to bring transparency in transaction, he added.
Considering inconsistencies, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) demanded for formation of a high-powered task force to remove inconsistencies immediately.
Otherwise, sector-based inequalities and inconsistencies will be acute in domestic trade and commerce policies in the coming days, he added.
"We think there are lots of problems in VAT law. The incumbent Finance Minister himself also admitted the inconsistencies in the laws. So, we demanded formation of a high-powered taskforce immediately to remove the anomalies and inequalities," said FBCCI President Jasim Uddin.
"The high-powered taskforce should be formed comprising with the members of the NBR, Bangladesh Trade and Tariff Commission and FBCCI to simplify the laws of import duty, income tax and VAT," he added.