Tuesday, 18 June, 2024, Reg No- 06
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NBR plans to tax untaxed sectors, withdraw exemptions on businesses

Published : Friday, 19 April, 2024 at 12:00 AM  Count : 93

The NBR is going to withdraw more tax exemptions currently enjoyed by business while will impose taxes on new sectors now going without paying tax to increase revenue collection.

These measures are on card to meet budget gap facing the visit of an IMF mission at the end of this month.
 
It has identified three main sources to increase the revenue collection such as phasing out exemptions, restructuring cigarettes taxes and installing more electronic sales devices to small businesses to achieve the goal in the budget for 2024-25

Official paper shows a VAT collection action plan now the VAT wing of the NBR is preparing estimates the highest contribution of Tk5,000 crore to come from scrapping full and partial tax exemptions currently enjoyed by businesses.

The paper, to be presented to an upcoming International Monetary Fund (IMF) mission to Dhaka later this month also proposes imposing taxes on sectors currently exempted through budgetary measures.

Besides, it sketches out plans to bridge the compliance gap through new measures, all to boost VAT collection in FY25.

According to the action plan, the revenue board projects an additional Tk3,450 crore in revenue through restructuring cigarette taxation measures in FY25. This is on top of the existing revenue of Tk4,050 crore expected from regular taxation.

The tax authority also expects to collect an additional Tk950 crore in VAT through the installation of Electronic Fiscal Devices (EFDs) or Sales Data Controllers (SDCs) from businesses in the next fiscal year.

The VAT wing of the NBR has identified several challenges in achieving the target for the upcoming fiscal year. It includes reducing imports, squeezed budgets for government projects, raw material import hurdles for manufacturing, ongoing dollar crisis and fuel supply concerns.

In the ongoing fiscal year, the NBR is currently working diligently to achieve its Tk140,000 crore VAT collection target.
For FY25, the NBR anticipates an 11.60 percent increase in revenue collection through regular measures. To achieve the remaining targeted amount, the NBR has formulated the breakdown with quantification.

"The projected revenue target in the VAT sector for FY25 is largely dependent on multiple preconditions. About 40 percent of total VAT revenue comes from the manufacturing sector and about 5 percent comes from the trade sector," the paper said.

VAT in the manufacturing sector is mostly dependent on imported raw materials whereas revenue from the trade sector is dependent on the import of consumable items as well as the production of goods, it added.

This year, imports showed a negative trend which means the revenue gap will be within the reach nxt year. The VAT wing said revenue collected from government project procurement and other agencies usually accounts for 8-10 percent of total VAT collection.

The government has set VAT collection targets of Tk143,000 crore for ongoing fiscal FY 24, Tk170,000 crore for FY25 and Tk238,000 crore for FY26.







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