A 20% rise in deposit for appealing against tax claims before VAT commissioners and appellate tribunals will deprive businessmen of getting justice and adversely impact businesses by creating a cash crunch.
On the other hand, transferring the clearance responsibility to the VAT office from the respective association will make the doing business difficult and hinder expansion.
In the proposed budget for the fiscal year 2020-21, Finance Minister AHM Mustafa Kamal has proposed to increase the deposit rate for appealing against tax claims from 10% to 20%.
Business people think the rise in rate for appealing against the VAT claims will pull out a huge amount of money from them, which creates a cash shortage. This will also deprive them of getting justice.
“As per the proposed changes for next fiscal year, businesses will have to deposit a total of 40% of the disputed VAT amount – 20% to file appeals before the commissioner of respective field and 20% for VAT Appellate Tribunal,” said a businessman, who preferred not to be named.
As per the existing laws, in importing machinery and dyeing chemicals and releasing it from the ports, the respective association provides clearance certificate. But in the proposed budget this has been canceled and all the responsibilities including monthly return submission and clearance certificate has been transferred to VAT office.
In addition, they will have to deposit a further 10% of the disputed tax in order to seek revision against the appellate tribunal’s verdicts before the High Court, which will pull out a huge amount of money from the pocket of the business community, he said.
This will deprive the business people of getting justice in case of unlawful claims of VAT. So the government should scrap this new rate, he urged the government.
On the other hand, doing business will be very difficult and lengthy due to transferring clearance responsibility to the VAT office instead of the respective associations.
“As per the existing laws, in importing machinery and dyeing chemicals and releasing it from the ports, the respective association provides clearance certificate. But in the proposed budget this has been canceled and all the responsibilities including monthly return submission and clearance certificate has been transferred to VAT office,” Mohammad Hatem, First Vice President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told Textile Today.
This will make doing business more difficult and it is against the government’s vision of improving ease of doing business ranking, said the business leader.
Though the 100% export-oriented industries are exempted from VAT they have to submit monthly zero rate returns. It is not logical and creates barriers in doing business, he added.
If the government does not scrap these unnecessary conditions from the proposed budget it will hinder the expansion of business, said Hatem.