Home ›› 01 Jul 2022 ›› Front
The Bangladesh government has imposed VAT (value added tax) on buying and selling of real estate – buildings and flats – in the secondary market. Moreover, real estate developers will now have to pay VAT at source for trading property in both primary and secondary markets.
Bitumen importers will also have to pay VAT at import stage from this FY. On the other hand, the government has decided to reduce VAT on meditation services, and withdraw VAT on imported lifts.
Finance Minister AHM Mustafa Kamal made the proposals in Parliament on Wednesday, which were passed by voice votes. The National Board of Revenue (NBR) has issued a gazette notification in this regard the same day.
In the FY22, VAT was already applicable to any individual, organisation or agency involved in the handing over or sale of new buildings – bought or constructed commercially. They will now have to pay VAT for selling or handing over such properties in the secondary market too.
From this FY, real estate developers will also have to pay a 2 per cent VAT at source for constructing buildings between 1 – 1,600 square feet, 4.5 per cent for buildings above 1601 square feet.
A 2 per cent VAT at source has also been imposed on re-registration of buildings of any size.
On June 9, the finance minister during his budget speech proposed imposing a 15 per cent VAT on meditation services. But the move faced severe criticism from those who avail meditation services.
In response, the government has reduced the VAT on such services from 15 per cent to 5 per cent.
The minister had also proposed increasing VAT on imported lifts to 31 per cent, in a bid to safeguard the local lift manufacturing industry. However, lift importers pointed out that such a move would cause lift prices to skyrocket, and impact the housing sector negatively.
So, the government has decided to cut VAT on imported lifts by 15 per cent this FY. It has also imposed a 15 per cent VAT at import stage on bitumen to safeguard the local industry. This decision will increase the prices of imported bitumen, and raise demand for the local variety.
Besides, product manufacturers, service providers, commercial importers and traders will have to keep a record of their accounting activities using an automated system, through software approved by the NBR.
Every centrally registered company will have to follow this procedure, or the NBR will cancel their registration. Once cancelled, a company will have to go through the registration process again. NBR officials believe that the new system will be more effective in curbing VAT evasion.
Meanwhile, wholesalers of cloth, paper and similar goods will no longer get back their advance tax (AT), as it will be considered as final settlement.
