The value-added tax, which will be effective for the next three years, has been a matter of much controversy as businesses implored the government to lower the proposed rate.
“I think I will be able to satisfy the business community by increasing the existing turnover tax and VAT exemption threshold,” Muhith said in parliament on Thursday.
He proposed raising the annual turnover threshold, exempting businesses with a turnover up to Tk 3.6 million.
The finance minister also put forward a proposal to raise the registration threshold, allowing businesses with annual turnover up to Tk 15 million to pay 4 percent in VAT.
VAT exemptions were also proposed for primary food items, public transport, public health and medical services, education and training. VAT exemptions for agriculture, livestock and fisheries will be maintained.
The incorporation of structural changes proposed by the business community has been a ‘milestone’ in the tax’s implementation, Muhith said.
The business community is ready to accept and welcome the new VAT, the finance minister added.
According to Muhith, though 850,000 taxpayers have been registered under VAT, only 32,000 have paid their dues.
Muhith said he has made proposals to simplify the VAT law's procedure and rules to increase the number of return filers to 60,000 within the next two years.
Discussions concerning the new VAT law have been underway since 2009. The new law was enacted in 2012, but some of its provisions were delayed to satisfy pressure from businesses.
The National Board of Revenue is ‘fully prepared’ to implement the 2012 VAT Act from Jul 1, Muhith said.
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