Base rate of import AT may rise for one-time settlement

Commercial imports are set to be levied 7.5-percent advance tax as the government may increase the AT base rate at import stage, for one-time settlement, in the upcoming budget.

The advance tax, collected at import stages from commercial imports, might be set at 7.5 per cent in a rise from 5.0 per cent in the new budget to be adopted, outside parliament, by the interim government on June 2, 2025.

Most import cargos are subject to the AT during import and it is adjustable with the actual payable taxes.

A senior official of the National Board of Revenue (NBR) says the commercial importers were subject to paying 5.0-percent tax in advance at import stage and 7.5 per cent at local stage, totaling 12.5 per cent, which would come to only 7.5 per cent with the final settlement.

"Traders also have long demanded settling entire tax at import stage on commercial imports to get rid of further scrutiny and hassles," he adds about the merit of amalgamation.

For manufacturers, the AT would be cut down to 2.0 per cent from the existing rate of 3.0 per cent.

In such arrangement the AT might be considered finally-paid tax from the upcoming fiscal year with no scope of adjustment or additional tax demand by VAT officials.

With the major change in the fiscal measure, the National Board of Revenue expects to mobilise Tk 140 billion from AT on commercial imports.

Currently, the NBR receives around Tk 100 billion from AT. An additional Tk 40 billion would be collected if the proposed hike sails through the advisory council's budget session.

Industry-insiders say the hike in AT would escalate prices of numerous imported commodities and fuel inflation.

The government introduced AT by scrapping Advance Trade VAT (ATV) and expanding its coverage to almost all imports.

Later, AT has been waived on essential commodities and some key products.

Former president of Dhaka Chamber of Commerce and Industry (DCCI) Rizwan Rahman says an increase in AT would impact cash flow in businesses, "already in a severe crisis".

He also alleges that "full and final settlement of taxes does not work properly as taxmen apply their discretionary powers to demand more taxes".

Mr Rahman suggests that the government frame tax policy after stakeholder consultation to make it implementable.

doulotakter11@gmail.com