New VAT law business friendly: WB

Terming the new VAT law as business and investment friendly, the World Bank (WB) said this online based system will reduce harassment and help the country to achieve its revenue target projected in the proposed budget for fiscal year 2017-18 (FY18).

“The new VAT law is more business-investment friendly than the old one. Implementation of this online system will help reduce harassment and it will not push up inflation,” said WB`s lead economist Zahid Hossain during the bank`s review for the proposed budget here today.

WB`s country director Qimiao Fan also spoke at the press conference.

Zahid Hossain said the government needs to highlight a comparative picture between the new and old VAT laws. Enforcement of this new VAT law will not increase prices of goods and services but negative publicity about price hike could push up inflation in the domestic, he said, adding that the authorities concerned needs to remain alert about it.

Replying to a question, the WB economist said implementation of the new VAT law will not affect purchasing capacity of the low-income people because most of the goods they use are exempt from VAT.

Moreover, the establishments from where the low-income people buy products are also exempt from VAT because of low annual sale-turnover, he added.

Hossain said the government took five years to enforce the VAT and Supplementary Duty Act, 2012 and it would not be right to delay more in implementation of this law.

About the excise duty on bank accounts, he said the banking sector is not giving right signal in this regard. “Question can be raised about it . . . it is not good when we are trying to increases the inclusiveness and depth in the financial sector,” he added.

Mentioning the high interest rates of savings tools, Hossain suggested adjustment of interest rates of savings tools with the market situation.

About the upward trend of rice price in the market, he suggested withdrawing the import duty on rice to ease the tension and instability that has gripped the staple market in the country.

WB country director Qimiao Fan said the proposed budget for FY18 is highly ambitious. Achieving the huge revenue collection target depends on proper implementation of the new VAT law, he added.

He said the major challenges for Bangladesh right now are ensuring congenial investment atmosphere, increasing exports, implementation of projects timely and keeping inflow of remittances stable.

Source: BSS