The Financial Express

VOP may linger at a price of Tk 1.0b

Fallout of deferment of VAT law

| Updated: October 25, 2017 03:05:29

Evaly and Fianancial Express Evaly and Fianancial Express
VOP may linger at a price of Tk 1.0b

The VAT Online Project (VOP) may linger for two more years at an extra cost of Tk 1.0 billion following the deferment of the new VAT law.  

The project, undertaken for introducing online payment of VAT under the Value Added Tax (VAT) and Supplementary Duty (SD) Act 2012 from this fiscal year, was scheduled to expire in 2019, two years after enforcement of the new law.

But, as execution of the new law has been deferred until July 1, 2019 -- amid strong protests by the business community -- the project would now need an extended lifespan until 2021.

As such, the project cost might escalate into nearly Tk 7.0 billion from the allocated Tk 5.56 billion, official sources said.

The new law was scheduled to replace the existing VAT law 1991, with a pivotal provision of a uniform rate of VAT applicable to all of the VAT-payers.

The National Board of Revenue (NBR) has sent a revised development proposal (RDPP) regarding the extension of the project to the planning ministry for its approval.

A senior NBR official said the proposal needs consent of the executive committee of the national economic council (ECNEC) for extension of the project tenure with an increased cost as mentioned above.

"Implementation of the fully automated VAT system would need support of the software. The project needs to continue for at least two years for successful implementation of the new law," he said.

The VAT online project was formally launched in 2013. Vietnamese company FPT is providing technical support for implementing the project.

The World Bank (WB) also allocated US$ 60 million for automation of the VAT system.

"Delay in implementation of the new VAT law blocked $30 million worth of World Bank funds. The development partner has pledged to disburse half the allocated funds after the launch of automated VAT system," he added.

The project has so far received $ 22.2 million from the WB, he said.

The VAT online project would modify the contract with the global development-financing agency.

Already a draft resolution has been prepared and a meeting was held on the issue, he informed.

"I hope the WB would release some funds, worth $15-16 million, after introduction of online VAT-return submission," he said.

The NBR planned to introduce online VAT-return submission by October next on an optional basis.

The VAT wing will have to amend some of provisions on VAT rule-1991 and needs approval by government high-ups for starting online VAT returns, the official said.

In a mass notice, the NBR requested all of the eleven-digit Business Identification Number (BIN) holders to obtain a new nine-digit BIN by December 2017.

The existing BIN will stand invalid for business operations including import-export from January 1, 2018. Furnishing BIN is mandatory for several types of business activities.

Some 50,000 of the businesses have obtained electronic BIN (e-BIN) so far. As the e-BIN was meant for the new VAT law, some of the provisions in the VAT rules would need amendment for the e-BIN-issuance process to adjust with the VAT law 1991.

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