Advance tax (AT) is likely to be imposed at commercial and import stages under the new value-added tax (VAT) law aiming to ensure proper revenue collection from potential sectors.
The new AT would replace the existing advance trade VAT (ATV) that is currently imposed at a rate of 5.0 per cent only at the import stage, finance ministry sources said.
The AT rate might be set below 5.0 per cent.
It is set to take effect from June 13, on the day of the fiscal budget announcement in parliament, under the Provisional Collection of Taxes Act 1931.
However, advance tax would be refundable to the businesses upon submission of their monthly VAT returns, sources said.
They said there would be four-stage VAT rates -- 5.0, 7.5, 10 and 15 per cent-excepting petroleum products that would see 2.0 per cent VAT.
The new fiscal measures are likely to be proposed by finance minister AHM Mustafa Kamal the same day.
The VAT rate for electricity would remain at 5.0 per cent in the new law.
It would be 2.4 per cent for medicine at the business stage.
Existing tariff value, package VAT, account current system and value declaration process would be scrapped in the new law.
Instead of package VAT system, the National Board of Revenue (NBR) will exempt all businesses having annual business turnover up to Tk 5.0 million from VAT payment.
The NBR would offer VAT rebate to only those who pay VAT at a rate of 15 per cent.
Existing excise duties on bank depositors and airline passengers will remain unchanged.
Sources said the new VAT law would simplify the VAT refund system by providing refund of the paid VAT upon submission of the monthly VAT returns.
The abolishment of the account current system is another major step that would help businesses keep their payable VAT in their business accounts for 45 days.
The protective supplementary duty on importables might remain unchanged to continue support to the local industry.
The new VAT law would be fully online and would focus on online submission of VAT returns. The NBR has readied its field-level VAT offices with adequate training and logistic support to implement the long-awaited law.
The government deferred the implementation of the new VAT law in 2017 for two years following a request from the business community.
It would replace the existing VAT law framed in 1991.
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