New VAT law: Heated exchange between Muhith, FBCCI

An advisory discussion of the new budget in the presence of Finance Minister Abdul Maal Abul Muhith devolved into a heated exchange after a businessman made threats over the upcoming VAT law.

The uproar broke out at the Bangabandhu International Conference Centre in Dhaka during a joint advisory meeting between the National Board of Revenue (NBR) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on Sunday.

At one point in the discussions Business Unity Forum Secretary and FBCCI Director Abu Motaleb claimed the government was levying the new VAT without providing small businesses sufficient training in how to deal with the new tax.

The 2012 ‘VAT and Supplementary Duty Act’ was to go into effect on Jul 1, 2016. But the government pushed the date back after complaints from businessmen. The existing rate of package VAT was raised at the time and it was announced that a 15 percent VAT would be levied from Jul 1. Though businesses demanded another deferral, the finance minister recently said the government would maintain its current schedule for the implementation of the tax.

Though the FBCCI and the NBR has made efforts to educate traders on the new law, the ‘efforts have come to nothing’, said Abu Motaleb.

“They trained some people for show … but if regular traders do not receive training, how will they understand what the electronic cash registry is?

“We oppose the implementation of this VAT in this situation. If the FBCCI’s demands are not accepted we will start protests.”

“Do not force us to demonstrate in the streets like schoolchildren!” he said in the presence of the finance minister and the NBR chairman. “But rest assured we will do so if you do not accept our demands.”

He threatened to move forward with the protests if any business with a turnover of Tk 50 million or less falls under the law.

The finance minister then interrupted Abu Motaleb, turning on his microphone and telling him that only 32,000 of the 800,000 registered businesses in the country pay VAT.

“How many small and medium-size businesses pay VAT? And still you threaten protests. If you take to the streets you will be stopped.”

The gathered businessmen began to protest the finance minister’s comment loudly. Some stood and began to shout, “Don’t threaten our protests”.

FBCCI Vice President Md Shafiul Islam attempted to calm the situation.

“Please be patient,” he said. “We hope the government will listen to our demands. We do not know what is in the budget because we have not seen it.”

He also called on the government to listen to the fair demands made by the businesses.

NBR Chairman Nazibur Rahman concurred and called for an end to the use of threats and the use of language appropriate to the setting.

Afterwards the finance minister, who was speaking as the chief guest, said “Abu Motaleb made very significant threats. Direct threats! He said he would bring the country to a halt!

“Now, I should not have gotten agitated. It was excessive. But please keep in mind that he should withdraw the threat.”