Govt likely to introduce Advance Tax, 4 new VAT rates

The government may introduce Advance Tax (AT) on import and commercial transactions under the new Value-Added Tax and Supplementary Duty Act-2012 to be implemented from the upcoming fiscal year 2019-2020.
There will also be four regular VAT rates — 5 per cent, 7.5 per cent, 10 per cent and 15 per cent — and two special rates — 2 per cent and 2.5 per cent — for petroleum products and medicine sectors respectively instead of a uniform 15 per cent originally adopted in the law. 
The government deferred the implementation of the law for two years in 2017 following strong opposition from trade bodies, including the Federation of Bangladesh Chambers of Commerce and Industry, against some measures of the law including a uniform VAT rate and abolition of package VAT system. 
The existing tariff value system for measuring VAT amount, package VAT and truncated value-based VAT, account current system and value declaration process will also be scrapped in the new law. 
National Board of Revenue has already finalised the proposals and finance minister AHM Mustafa Kamal may propose the changes in his budget proposals to be placed on June 13 before the parliament. 
VAT-free annual turnover limit will be increased to Tk 50 lakh from Tk 30 lakh as compensation of scrapping package VAT system for small traders. 
The ceiling of turnover tax is set to be increased to Tk 3 crore from Tk 80 lakh and the rate of turnover tax may be set at 4 per cent from existing 3 per cent. 
Finance ministry officials said that the government was set to introduce AT scrapping the existing advance trade VAT at the rate of 5 per cent, which is currently applicable on import of almost all products, to ensure proper collection of VAT from all potential sectors. 
The rate of new AT may be set at 4 per cent and traders will be able to take refund of the tax by filing of monthly VAT returns, they said, adding that giving refund process will also be simplified. 
The provision of AT may come into force from June 13, the date of announcement of the national budget for the Fiscal Year 2020. 
Businesses that will pay VAT at the rate of 15 per cent at all stages of supply chain will be eligible for getting VAT rebate. 
In the new law, VAT on electricity will remain at 5 per cent while existing excise duty on bank deposits and airline passengers will remain unchanged. 
The list of products having supplementary duty at import stage may remain unchanged to give protection to local industry.
Currently, there are more than 1,400 products on which SD is applicable. 
The VAT system under the new VAT law is likely to be completely automated as transactions and returns submission are supposed to be done online but NBR has yet to complete the preparation to introduce online VAT system. 
NBR has now introduced the new law with the provision of both manual and online returns submission provisions. 
Gradually, the system will be completely automated.

News Courtesy: www.newagebd.net