Muhith firm on 15 percent VAT; businesses argue for 10 percent

After Finance Minister AMA Muhith made it clear that he will be uncompromising on collecting 15 percent value-added tax (VAT) from July 1, the businessmen are still hopeful that the government will not impose the high rate.

In a meeting with the finance minister on Monday ahead of the national budget for 2017-18 fiscal year, a delegation of business leaders also demanded that the VAT be set at 10 percent.

But the finance minister said, "I've made two things clear - first, the law (on VAT) will be effective from July 1, and the second, the rate will be 15 percent."

FBCCI First Vice President Shafiul Islam Mohiuddin, however, told reporters that Muhith was 'yet to give the final decision' on their demand for 10 percent VAT.

"He (Muhith) said he has taken note of our demand and added that he would have another discussion before implementing the VAT law," Shafiul said.

"There is no alternative to talks. We want to keep the hope alive," he added.

The government wanted to implement the Value Added Tax and Supplementary Duty Act of 2012 from July 1 last year but scrapped the plan following intense protests by the trade bodies. The rates of package VAT were raised instead.

Since the plan was shelved last year, the finance minister has been saying the law will be implemented from July 1 this year.

In Monday's meeting, Commerce Minister Tofail Ahmed, National Board of Revenue Chairman Nojibur Rahman, former FBCCI presidents Salman F Rahman and AK Azad, and the apex trade body's Advisor Manjur Ahmed, among others, were also present.

Tofail said the government would have to consider 'many things' while taking the decision on VAT law.

"The government will take a realistic decision," he quoted Muhith as saying, and added, "Such a decision will be made that both the people and the businesses will be happy."

FBCCI Advisor Manjur said the VAT rate should be fixed in such a way that the businesses would pay it without complaint. "But no one will be willing to pay VAT if it is 15 percent. It will push the cost of living and inflation up," he added.

He also said they had a plan to take the issue up with Prime Minister Sheikh Hasina if the next budget fails to address their demand for 10 percent VAT.