Businesses' anti-VAT law stance to misappropriate people's money: NBR

The National Board of Revenue (NBR) has described the opposition to the new VAT law by businesses as an 'attempt to misappropriate VAT paid by the people.'

After Sunday's heated exchange between the finance minister and representatives of the country's top trade body, the NBR said in a statement that the new law will ensure that the 15 percent value added tax (VAT) paid by consumers reaches the state coffers.

Coining the term 'honourable VAT trustees' to describe businessmen, it said they act as the trustees of the funds people pay as VAT to the state.

It asked 'not to be lenient to those, who collect VAT and do not forward it to the government properly' and urged them to dismiss 'propaganda to misappropriate the people's money.'

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 government has been saying the law will be implemented from July this year.

Businesses want the 15 percent VAT to be revised to something between 7 and 10 percent.

They also have reservations over the scrapping of a fixed VAT (package VAT) method, VAT registration process and the ceiling of the annual turnover tax.

The stand-off between businesses and the government continues even after two meetings in the last two months and on Sunday, Minister AMA Muhith was involved in a heated exchange after a businessman threatened protests over the new law.

In its statement, the NBR rebuffed claims that the new VAT law will hike inflation.

"These claims are made without considering the rebates…The reality is the new law will cut down the tax burden at the consumer level."

The NBR said that the new law exempts VAT from basic necessities like, food, life-saving drugs, public transport, health, education and agriculture, which will benefit low income groups.