FBCCI wants clarity on VAT rates under new law

Finance Minister AHM Mustafa Kamal has failed to offer clarity on the Value Added Tax rates under the new VAT Act, according to the apex trade body FBCCI.

Reacting to the budget on Thursday, FBCCI President Sheikh Fazle Fahim told bdnews24.com, "It's been said that the new VAT Act will come into effect on Jul 1."

"But the budget speech does not clarify the specific VAT rates in different sectors. Therefore the percentage of VAT to be imposed on an industry or a product remains unclear."

The government will move to implement the long-awaited VAT Act 2012 in fiscal year 2019-20, having shelved the legislation in the face of opposition from the business community.

Business leaders have long complained about the uncertainty over the percentage of VAT to be imposed on different products. But the finance minister said that the issues surrounding the legislation had been redressed after a meeting with business leaders and NBR officials on May 14.

Kamal moved to propose a few amendments to the VAT law in his budget speech. He recommended excluding small and marginal traders with an annual turnover up to Tk 500,000 from the VAT net.

He further proposed a 4 percent VAT on an annual turnover of Tk 500,000 to Tk 30 million by small and medium-sized enterprises (SMEs).

Along with the standard VAT rate of 15 percent, the new legislation will offer reduced rates of 5 percent, 7.5 percent and 10 percent for specific goods and services, according to the finance minister.

"We have already started analysing the budget, including VAT. We will provide a formal report on the entire budget on Saturday," said Fahim.

Finance Minister Kamal on Thursday unveiled a Tk 5.23 trillion spending plan for fiscal 2019-20, which is an 18 percent increase from the revised budget of the outgoing fiscal year.

"This is a continuation of the previous 10 budgets presented by the last two governments headed by Prime Minister Sheikh Hasina," said the FBCCI chief.

"We welcome the proposals to reduce the reliance on the banking sector and moving to other areas like the stock market instead to draw funds for investment in the country."