The International Monetary Fund has urged Bangladesh to proceed on schedule with the introduction of the new value-added tax from July 2017.
Bangladesh intends to introduce a uniform 15 percent rate of value-added tax (VAT) from July 1, based on a new VAT law drawn up in 2012 that has yet to take effect. Exemptions will be in place for basic goods and services for lower income taxpayers. As well as boosting revenues for Bangladesh, the new VAT regime is intended to make tax compliance significantly simpler, especially for smaller firms.
At the end of a recent visit, an IMF official said: "Modernizing the tax system will be needed to boost Bangladesh's low budget revenue and allow room for public investment and social spending to increase to levels consistent with the government's growth ambitions without compromising fiscal sustainability. Launching the new VAT Law in July 2017 as planned will be central to raising revenue, and will have other significant benefits as well. In particular, it will make tax administration more transparent, it will reduce taxpayers' compliance costs, and serve as a key building block for a modern tax system more broadly."