DCCI hails move to implement new VAT law in FY20

The DCCI has hailed the government’s decision to implement the long-awaited VAT Act, 2012 in fiscal year 2020, terming it ‘a timely initiative.’

Finance Minister AHM Mustafa Kamal announced the move in his budget speech on Thursday, with the legislation previously being cast aside in the face of opposition from the business community.

“The DCCI hopes that this new VAT Act will play an important role in doing business,” said the organisation’s President Osama Taseer in a statement on Thursday.

His reactions came shortly after Kamal unveiled the national budget for the upcoming fiscal year.

“But there should be a provision for input credit tax under the Act. Otherwise, customers may have to bear an extra burden,” warned Taseer

Such a burden may drive the inflation rate up beyond the proposed level under the budget, cautioned the DCCI.

But the chamber also urged the government to create awareness anout the new VAT Act before going about implementing it.  

“In addition, VAT collection procedures should also be simplified while the government must also ensure a harassment-free system in the country,” said Taseer.

The proposed budget for 2019-20 fiscal year sets out a revenue income goal of Tk 3.77 trillion. More than Tk 3.25 trillion is expected to come through the National Board of Revenue.

But the government must widen the tax net to attain its revenue collection target of Tk 3.7 trillion, according to the DCCI.

“Achieving such a high target will be a challenge for the NBR,” said Taseer.

Kamal unveiled a Tk 5.23 trillion spending plan, which is an 18 percent increase from the revised budget of the outgoing fiscal year.

The deficit is set extend to Tk 1.45 trillion in the 2019-20 budget, which is five percent of the GDP.

The government plans to draw Tk 473 billion from banks to balance the deficit but the borrowing should not hamper credit flow in the private sector, observed Taseer.

The DCCI lauded a slew of decisions in the budget, including the government’s move to curb non-performing loans and the formation of a banking commission.

Taseer also suggests revising the tax-free income limit to Tk 300,000 from the existing Tk 250,000, considering the cost of living.

He called for a reduction of the corporate tax in order to increase the private investment necessary to generate employment in the country.

The DCCI believes the GDP goal of 8.2% is ‘quite achievable’, but to reap the benefits of such growth, the government must create jobs and attract local and foreign investments.