The government is set to finalise the revenue target for the upcoming financing year, putting premier focus on the Value Added Tax (VAT), sources said.
The VAT wing will be the thrust revenue earning sector in the FY20 as the government is optimistic about gearing up the collection of this indirect tax on the back of the implementation of VAT and Supplementary Duty Act-2012, an NBR official engaged in budget committee told Bangladesh Post.
The income tax will be the second prioritised realm in the forthcoming revenue budget, as the government has a plan to make this wing the top revenue earning source by the next few years.
The government as part of the move of easing the country's business climate, also undertook cutting down the figure of import duties on a gradual basis, and that will be reflected in the next budget, sources said.
While reviewing the trend in revenue budgets of the last five years, it was found that VAT was set as the topmost revenue earning regime though the government finally had to revise the target every year, following the NBR's incapability to meet it.
NBR officials, however, believe that huge reforms will be brought in the VAT wing once the new VAT law comes into effect, raising the growth of overall revenue collection.
"VAT wing will entirely be brought under automation through the implementation of the law, ensuring transparency and intercepting evasion," they said.
"The new law will exponentially facilitate the country's business community, encouraging them to pay taxes accurately, and thus increase the government's revenue," they added.
Tax officials also believe that the government, after implementation the new law, needs not to revise the revenue target as it will make the VAT wing vibrant, increasing revenue collection.
In the current fiscal year, Tk 110000 crore out of revenue target of Tk 296201 crore has been set to collect from VAT, though NBR in the first eight months, could collect only Tk 52,907 crore.
In the fiscal 2017-18, a total of Tk 91,000 (36.6 percent) was set to be collected from VAT, but the government at the end of the year, had to revise the amount to Tk 68,675.
In the fiscal 2016-17, Tk 72,764 crore was set to be collected from VAT (39.3 percent), but it was revised to Tk 68,775 crore.
While analysing the trend of last five years’ revenue collection, it was found that 36.07 percent of the overall amount was extracted from VAT, followed by income tax (35.17 percent) and import duty (28.76 percent) respectively.