A person is required to be registered for VAT or enlisted for turnover tax after triggering the registration threshold or enlistment threshold BDT 8 million or BDT 3 million respectively as turnover of an economic activity of any person in a year, stated in the keynote paper presented in a seminar organized by the Institute of Chartered Accountants of Bangladesh (ICAB) on ‘‘New VAT Act 2012 and Rules 2016-Highlights and Challenges’’ on Sunday, 05 March 2017 at its auditorium.
Barrister Jahangir Hossain, Member, VAT Policy, NBR, GoB graced the occasion as the Chief Guest. Abul Khair Chowdhury FCA, Past President, ICAB conducted the session as Session Chairman while Adeeb Hossain Khan FCA, President-ICAB delivered the welcome speech. Muhammad Mehedi Hasan FCA, Partner, Rahman Rahman Huq, Chartered Accountants, presented the Key-note Paper in the conference. ICAB Vice President Mostafa Kamal FCA also spoke on the occasion.
ICAB President Adeeb Hossain Khan FCA said that there are some challenges in the new VAT law 2012 which are required to address properly. After implication of the new VAT law, the doing business of the country would be easier, he added. Since inception of the VAT more than two decades ago, it has been influencing our business greatly, he further added. On reply to the questions from the audiences, the Chief Guest Barrister Jahangir Hossain said, after effective of the new VAT law on 1st July 2017, the current accounts of the organizations will no longer exist. VAT should be paid in Online Payment System. It will reduce the hassle of the tax payer. He urged to make the accounts balance zero to help the new VAT law smooth functioning.
The paper presenter Muhammad Mehedi Hosan FCA, said that under the existing VAT system, taxpayer is required to deposit VAT to the Government Exchequer and maintain positive (debit) balance by a combination of treasury deposits and input VAT payments before making a sales of goods or service. Such advance payment of VAT system will not be required in the new VAT legislation. Taxpayer can now conduct sales of goods or services without maintaining a debit balance with the Government. All output VAT and input VAT is adjusted on the VAT Return and the net amount is then deposited to the Government Exchequer, the paper stated. It was mentioned that as per the VAT Act 1991, VAT is paid on imported services and is then taken credit against the Output VAT. Under the new VAT Act 2012, applicable VAT on imported services will be shown as both output tax and input tax of the recipient. This implies that there is no cash outflow for payment of VAT on imported services. Under the new act the rules of package VAT will be withdrawn and uniform VAT rate 15% will come into effect.
Conference Chairman AK Chowdhury FCA, Past President of ICAB said the new VAT law has some complex features. We have to learn more about the law because it will impact on everybody’s life.