The National Board of Revenue (NBR) has aimed at earning Tk 2,092 crore more revenue in the upcoming fiscal (2019-20) by scrapping Vat (value added tax) exemptions enjoyed by some sectors including telecom for import of machineries.
The revenue board has estimated to earn Tk 1,000 crore alone from telecom machineries, while Tk 800 crore from production of edible oil, Tk 10 crore from mustered oil, Tk 200 crore from aluminum, and plastic sectors.
Besides, the exchequer expects to earn Tk 80 crore from businesses of producing television programme and Tk 2 crore from astrologers and marriage match-making services.
These sectors have been enjoying VAT exemptions since a long.
In the proposed budget for the upcoming fiscal, it was mentioned that 15 percent Vat will be applicable for import of telecom machineries, 5 percent for production of mustered oil, 15 percent for other edible oil, and 15 percent for the service of marriage media agencies and astrologers.
On the other hand, the NBR will loss Tk 160 crore revenue for offering Vat exemption from three sectors - bread production, agriculture machineries production, rent of showrooms operated by women entrepreneurs.
A senior NBR official, seeking anonymity, told the Bangladesh Post that the government proposed to cancel exemption of Vat from some sectors as those have now become solvent.
Still, a good number of products are still enjoying Vat exemption, and withdrawal of the facility for some items might help boost government’s revenue, he said.
He, however, claimed that VAT exemption is usually offered for particular items or sectors for a certain period of time for promotion of the sector or keeping the prices affordable to consumers.
The government is going to implement the Vat and Supplementary Duty Act-2012 from July 01, 2019, incorporating provisions, including multiple rates.
Finance Minister AHM Mustafa Kamal, in the budget speech, said Vat exemption will also continue in some sectors in the new fiscal.
“I am proposing to continue the existing Vat exemption facility in case of government's priority and fast track projects, such as the Bangladesh Economic Zones Authority (BEZA) and the Public-Private Partnership (PPP) projects,” he said in the parliament.
In addition, he also proposed to continue the existing Vat and supplementary duty exemptions for heavy industries like automobiles, refrigerators, freezers, air conditioners, motorcycles, mobile industries, etc. for the growth and development of heavy domestic industry and export sector.
According to Finance Bill 2019, a total of 98 products and 42 services will enjoy Vat exemption facility in the next fiscal.
The products include essential commodities like rice, vegetables, animals while service includes basic needs like medical services, education and other social and cultural services.
The NBR official said they would lose about Tk 15,000 crore at the end of the ongoing fiscal for the Vat exemptions, causing a huge revenue shortfall.
The NBR registered a huge loss for offering exemptions to some large businesses like LNG and gas imports, capital machinery import for the government projects, and mobile internet.
VAT is the biggest source of revenue for the NBR, followed by income tax and customs.
The NBR will have to collect a total of Tk 325,600 crore in the upcoming fiscal, while target from the Vat is Tk 117,672 crore.