VAT law to be effective with 3 rates: Finance Minister

Finance Minister AHM Mustafa Kamal today reiterated that the new VAT law would come into effect from July 1, saying that there would be three different VAT rates.

“There will be no single VAT rate… rather there will be three different VAT rates like 5%, 7.5% and 10% to be effective from next fiscal year,” he said while briefing reporters after a pre-budget meeting at the NEC Conference Room in the city’s Sher-e-Bangla Nagar area.

Parliamentary Standing Committee Chairman on Finance Ministry Abul Hasan Mahmood Ali was present at the briefing.

Answering a question, Kamal said the 15 percent VAT rate is not likely to exist from the next year.

The finance minister held the pre-budget meeting with the Chairmen and members of Parliamentary Standing Committees on different ministries including the Ministry of Finance and the Ministry of Planning and on Public Accounts and Public Undertakings.

Kamal said initially, 50,000 machines would be set up to collect VAT from some 50,000 business enterprises and gradually the number of such machines would be increased to 5 lakh.

He said the government would consider lowering the corporate tax rate keeping in mind the revenue collection scenario.

“We’ll have to generate more revenue to meet our growing demand and the income tax, customs and VAT are the main sources of revenue in this regard,” he added.

Referring to the demand of the lawmakers, Kamal said the government has a plan to enlist more educational institutions under the MPO system starting from next fiscal year and it would be done in phases in three years. “It would be done after final consultation with the Prime Minister,” he added.

Listing the priority of the AL government to generate more employments for the youths, he reiterated that efforts would be there to generate employment opportunities for at least one person from each family either from public or private initiative to contribute to the GDP.

“If it is possible, then the pressure on the social safety net programmes would be reduced,” he said.

Underscoring the need for diversifying the exportable items as well as exploring new markets, he said currently different types of incentives are being given to different sectors on export. But, a plan is there to apply the same rate over all the items.

However, Kamal said higher incentive could be provided to sectors like ICT, which is still lagging behind considering the global turnover of US Dollar 3 trillion of ICT products compared to $400 billion global turnover of RMG products.

In order to address the Non Performing Loans, the Finance Minister said the government is planning to establish an Asset Management Company.

Besides, there is a plan to introduce crop insurance, especially for the Haor region and introducing universal health insurance.

Earlier in his introductory remarks, Kamal said he would place the budget for FY20 overcoming the shortcomings and deviations keeping ahead the goal of turning Bangladesh into a developed country by 2041.

He said the government wants to place a big budget in a transparent manner engaging people from all walks of life.

Mentioning that the country is moving forward on the right path as showed by Father of the Nation Bangabandhu Sheikh Mujibur Rahman under the dynamic and able leadership of Prime Minister Sheikh Hasina, Kamal said by following that path, it would be possible to ensure economic emancipation and build a hunger and poverty-free ‘Sonar Bangla’.