Al Amin :
In the upcoming budget, it is likely that a unified 15% value-added tax (VAT) will be imposed on at least fifteen products.
This measure aligns with a recommendation from the International Monetary Fund (IMF) for the National Board of Revenue (NBR) to propose a uniform 15% VAT rate across all products and services.
However, implementing such a VAT rate could potentially reduce consumers’ purchasing power.
Discussions regarding this tax proposal took place during a meeting on Tuesday between the Prime Minister and the Chairman of the National Board of Revenue (NBR), Abu Hena Md. Rahmatul Muneem, along with policy officials. Tax officials are currently seeking approval for major changes related to the budget document for the upcoming fiscal year. This suggests that adjustments to VAT rates on specific products are under consideration as part of broader fiscal planning efforts.
Prime Minister Sheikh Hasina affirms the proposal of the revenue board’s curtailing lawmakers’ facility of importing duty-free vehicles and imposing 25 percent customs duty and 15 percent VAT on MP’s car imports, which are the highest rates at CD and VAT.
MPs currently enjoy exemptions from supplementary duty (SD), advance tax (AT), and advance income tax (AIT) on imports, whereas regular con sumers may face significant supplementary duty rates of up to 500%, in addition to other taxes. Meanwhile, investors associated with entities like the Bangladesh Economic Zones Authority (BEZA), Bangladesh Export Processing Zones Authority (BEPZA), and Hi-Tech Park Authority may be subject to customs duty (CD) and value-added tax (VAT) on imports similar to MPs, but they could also encounter supplementary duty (SD) and potentially other taxes.
Prime Minister Sheikh Hasina has directed the curtailment of duty-free import privileges for investors, especially for products that are currently being locally manufactured, such as construction materials. This directive comes in contrast to a recommendation from the International Monetary Fund (IMF) for the National Board of Revenue (NBR) to move away from duty-free regimes.
Currently, certain items like food, food grains, agricultural inputs (including fertiliser), and some basic industrial raw materials benefit from zero-duty import facilities. The discussions around these import policies highlight efforts to align import taxation with domestic production dynamics and revenue needs, balancing trade facilitation with revenue generation objectives.
Some basic industrial raw materials may face at least 1 percent duty in the next fiscal year, while others will remain unchanged.
NBR proposed to cut the baggage rule facility, saying that no one is allowed to bring a gold bar more than once in a single year, but as PM opposes and says that as individuals pay duties under the baggage rule, it will be continued with clearing taxes as it is.
VAT officials made some proposals to the Prime Minister for approval of giving exemptions to some new sectors, but the PM disagreed with the matter, saying, “No further tax exemption, and you have to come out with such a culture.” Even so, there is no scope to bring down any rate as it has already been used for them,” officials say.
PM also directs not to extend further duration for any sector that is scheduled to end.
NBR proposes reducing VAT on pesticides. As farmers and producers are used to that, PM disagrees. However, in the in the proposal of increasing the source tax on selling rice and other goods to the government, PM directs NBR to don’t do it because most farmers are not eligible to pay taxes. So, don’t be harsh on them.
Besides, SD on mobile talk time may increase in the coming fiscal year too.
In the proposed budget for the upcoming FY25, the company tax rate may be cut by two and a half percent, and PM approves that under conditions of maintaining compliance, aimed at encouraging companies to pay more taxes and increasing transparency in tax payments.
NBR officials say the previous statistics indicate that while corporate tax is cut, overall revenue is up.
PM approves the NBR’s proposal to end individual investors’ exemption from paying capital gains tax on listed stocks, mutual funds, bonds, and debentures in line with the International Monetary Fund’s (IMF) prescriptions for the next fiscal year.
To curb harassment, tax officials’ practice of assessing returns may also end in the next FY, which will be assessed by tax inspectors. The wing will then go to fully automated systems to reduce physical interaction between tax officials and taxpayers.
As inflation hits mostly lower-income groups, the income tax rate for individuals will remain unchanged, though the IMF earlier recommended raising the tax-free income threshold to Tk 5 lakh from the existing Tk 3.5 lakh, along with abolishing tax exemptions on employment allowances, benefits other than the basic salary, and investments for individuals.
The global lender also recommended repealing all sorts of tax exemptions on information technology-enabled services, but PM is against the suggestion and saying that exemptions in ITES will not go as they are now, but what will be, I will inform later, officials say.