Bangladesh retailers want 'package VAT'  to stay

Retailers in Dhaka have closed their shops to demand that the ‘package VAT’ system be retained against a plan to impose 15 percent VAT.

Published : 30 May 2016, 10:46 AM
Updated : 30 May 2016, 11:37 AM

Businessmen formed a human chain outside Dhaka’s Eastern Plaza at noon on Monday for the demonstration called by the Bangladesh Shop Owners' Association(BSOA).

Another group from Karwan Bazar formed a human chain opposite Hotel Sonargaon,causing traffic to build up at the intersection.

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.

They 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 proposed process will trouble businesses and make it difficult for authorities to collect the tax, according to the FBCCI.

The Consumers Association of Bangladesh (CAB) is also worried that the plan will raise prices of everyday necessities.

“The circular from 2005 which put forward the package VAT system talked about

forming three committees for fixing the VAT. A central, local and sub-committee,” said BSOA Secretary General Md Shah Alam Khandaker.

“But NBR officials have not taken the initiative to form these committees. The package system failed because of them. There were two to three committees in the whole country but they mostly remained quiet.” Businesses were ready to cooperate with VAT collection if the NBR officials played their part in being active, he added.

Prime Minister Sheikh Hasina had considered the demand from businesses to retain the package system after a proposal in Parliament intended to have it removed in 2013, said BSOA President SA Kader Kiran.

She can still choose to save them from ‘massive worries’ that the new VAT plan will bring, he said at a press conference. “This law can’t really be applied in Bangladesh. It will deny the government revenues and create problems for businesses.”

“Every business will then need to employ one person who will just calculate the 15 percent tax. PSO and ECR machines will need to be set up,” he said.

The package VAT system was used in EU countries, Vietnam, Thailand and other neighbouring countries, he said, while proposing that the authorities hold more talks before reaching a decision.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher