DCCI calls for uniform single-digit VAT rate across the board

The Dhaka Chamber of Commerce & Industry (DCCI) has proposed to fix a uniform single-digit VAT rate across the board and nominal 1% VAT for the traders of informal sectors in the next budget for fiscal year 2025-2026 (FY26).

The DCCI said such a rate would bring transparency in the overall revenue management, reduce cost of doing business and have a positive impact on the manufacturing sector.

At present, the DCCI said the standard VAT rate is 15% across the board, but it has been segregated to different slabs like 10%, 7.5% and 5% in different sectors that actually caused difficulties for traders as well as disputes in many cases. Besides, many traders are bearing the burden of additional tax due to non-availability of input tax rebate benefit, it added.

These proposals were submitted by Taskeen Ahmed, President of DCCI, while placing the Chamber’s budget (FY2025-26) proposals to the NBR Chairman Md Abdur Rahman Khan in a pre-budget meeting at the NBR Building today, said a DCCI press release.

This year, a total of 42 budget proposals were placed by Taskeen Ahmed focusing on widening tax net and setting a target of revenue collection, reducing tax rates, introducing business-friendly tax policies and automation of revenue system, reforming VAT management, protecting local industries and manufacturing sectors, simplifying import duty, tariff system and tax structure for the individuals.

DCCI President Taskeen Ahmed congratulated the NBR for taking the initiative to bring all taxpayers under the online income tax return process from the next fiscal.

He also mentioned that according to NBR data, there are more than 10.13 million TIN holders in the country, but from July 1, 2024 to February 6, 2025, only more than 37 lakh returns were submitted.

The DCCI President proposed setting a short, medium and long-term target for increasing tax payers and expanding the tax net.

Taskeen Ahmed also called for introducing an automated tax return system to facilitate corporate entities to file their tax returns online. Also considering the prevailing inflationary situation and its burden on the mass people, he requested for raising the tax-free income limit for the individuals from Taka 3.50 lakh to Taka 5 lakh.

In addition, the DCCI president proposed gradual reduction of advance tax at the import level for the commercial importers and gradual phasing out of the existing advance tax for the manufacturers at the import level.

He said that traders have to pay more customs duty than the actual import price due to the difference between the tariff value set by the customs authority and the market price, which is increasing the business cost as well as making the import process complicated and expensive.

In this regard, he proposed to impose a fixed rate of customs duty instead of tariff value set by the customs authority.

NBR Chairman Md. Abdur Rahman Khan said the NBR is determined to expand trade and investment through gradual reforms of trade-related revenue policies.

He also said that the revenue board would try to address the tax expenditure adding, “A portion of people are giving tax and the others are not, this can’t be accepted,”

At present, he said the TIN holders in the country are about 10.14 million whereas the number of TIN holders has increased by ten million in the last ten years, but the number of taxpayers has not increased to the desired level compared to that, which is disappointing.

Rahman also said that NBR is working to bring soon the corporate tax return system completely online and for this, initiatives have also been taken.

The NBR Chairman also opined that there is a need to reduce the corporate tax rate in order to create an environment to transform individual enterprises into corporate entities gradually under a corporate culture in the long run.

Regarding various VAT rates, he said if the business community agrees and can come to a consensus, the government is keen to bring the VAT rate to a single digit instead of maintaining different slabs that actually creates complexities in reality.

But, for that businessmen’s will, accountability and transparency are essential in this regard, he added.

In this connection, he proposed that the NBR can develop integrated software to be made only by the local IT expertise to easily calculate accounting, do audits and submitting VAT or even income tax returns automatically without any hassle so that all can take its benefits centrally but through online.

This proposed software may be developed through web-based and by this system, NBR will have access to TIN and BIN holders’ databases also.

Rahman also said the NBR would try to be liberal in terms of tax rebate system in the next fiscal year (FY26).

DCCI Senior Vice President Razeev H Chowdhury and Vice President Md. Salem Sulaiman were also present on the occasion. (BSS)