Muhith meets PM today to discuss VAT rate

The government instead of lowering the VAT rate significantly might incentivise businessmen by raising turnover tax ceiling to over Tk 10 million from Tk 8.0 million.

Finance Minister A M A Muhith said Wednesday while briefing newsmen after a meeting with visiting JICA President Shinichi Kitaoka at his secretariat office.

Mr Muhith also said he will meet Prime Minister (PM) Sheikh Hasina on Thursday (today) for finalising the new VAT (value added tax) rate.

"We'll have a meeting on Thursday, after that I'll take the decision (on VAT rate)," he added.

But the minister again turned down the plea of more than one VAT rates.

"Reducing (VAT) rate is very difficult. Even if we reduce it by 1.0 per cent, it can be managed. If we reduce it more, we have to change the software (of Electronic Cash Register), which will take time," he said.

The new VAT rate is set to be 15 per cent, as the government is going to enforce the VAT and SD Act 2012 from July. However, in the face of strong protest by business community the government is considering lowering the rate to some extent.

"What I can say, the rate will remain at a comfortable level."

Mr Muhith said if the turnover tax ceiling is raised, the businessmen will not get any scope to make any further demand (for VAT rate hike).

He, however, said if the ceiling is raised to over Tk 15 million, as demanded by the businesses, lot of entities will go out of tax net.

"But I will give a substantial increase (regarding the ceiling)."     

According to a calculation, if the VAT rate is reduced by 1.0 per cent, the revenue collection will go down by Tk 80 billion.   

Regarding his talks with the JICA president the minister said this is the first high-level visit from Japan since the terrorist attack in a Gulshan café last July in which several Japanese nationals alongside others were killed.   

Mr Kitaoka was scheduled to visit Dhaka last August. But he postponed it citing security concern following the incident.

"It's a friendly visit. They are now satisfied with the steps that Bangladesh has taken after the incident."

The minister said Japan is a big donor of Bangladesh, and the Japanese Prime Minister has assured Bangladesh of providing US$ 5.0 billion in three years.

Replying to a query Mr Muhith said Japan will commemorate its citizens, who were killed in the café attack last year. Bangladesh is also planning to hold a programme to remember those victims.

"That will be an event to protest against extremism," he added.