Clicky
National, Front Page

Manufacturers, service providers to be turnover taxpayers


Published : 21 Jul 2019 08:55 PM | Updated : 07 Sep 2020 03:19 PM

Seeking to widen the revenue base, the National Board of Revenue (NBR) has ordered that at least 160 types of small and medium manufacturers, service providers and suppliers be brought under the turnover taxpayers category in sync with newly-enacted Value-added Tax and Supplementary Duty Act-2012.
The NBR issued a Statutory Regulatory Order (SRO) on July 17 asking all business entities concerned to comply with the order.

The government enforced the Value-added Tax and Supplementary Duty Act-2012 in the current fiscal year, scrapping many previous orders. As per the new law, small and medium range business entities in city corporation areas will have to pay turnover tax at 4 percent for annual turnover ranging from Tk 50 lakh to Tk 3 crore.

Under the law, the annual turnover up to Tk 50 lakh has been kept out of the VAT net.Earlier, small businesses had to pay a package VAT but the the new VAT law scrapped it. The NBR’s SRO said that as per the VAT and Supplementary Duty Act-2012, small and medium manufacturers, service providers and suppliers must be registered as turnover taxpayers.

In the SRO, the VAT wing of NBR has notified 160 goods and service that must be listed as turnover taxpaying sources. The products include milk products, glucose, lozenge and chewing gum, chocolate, biscuits, jam and jelly, marble stone, lead oxide, glycerine, melamine, antiseptic medicine, detergent, foam, PVC pipe, plastic product, tyre-tube, hardboard, rubber product, synthetic fiber, carbon rod and many other.

Besides, service providers, including hotels and restaurants, decorators and caterers, motor workshops, dock yards, ports, advertising agencies, printing press, land development agencies, electric laundry, clearing and forwarding agencies, community centeres, engineering firms will have to be listed as turnover taxpayers.

A senior VAT official told Bangladesh Post on Sunday that the listed business entities, as per the SRO, must be registered as turnover taxpaying entities in in city areas. “We exempted small traders having turnover of up to Tk 50 lakh threshold from VAT payment in order to release them from the tax burden, he said.
“Besides, we are taking into account that the welfare of the businesses has also increased with the the VAT registration threshold having been pegged at Tk 3 crore from the previous Tk 80 lakh. So from now on, no irregularity will be tolerated and the businesses must pay tax as per the existing law,” he added.
However, the new law has not clarified whether NBR or the businesses determine the minimum turnover.

Experts, after enacting the new VAT law, said this provision might give rise to disputes between tax officials and businesses. If tax officials determine the minimum turnover, it may create discontent among the business or otherwise, the tax authority will have to accept the register book kept by the traders.
In the previous law, the small traders in the city corporation areas had to pay Tk 28,000 as package VAT.

But there were then allegations that many large-scale businesses using fake identity used to pay package VAT, causing a huge loss to the government’s revenue.