G20 urged to speed up digital tax

Top G20 finance officials agreed Saturday there was an urgent need to find a global system to tax internet giants like Google and Facebook but clashed on the best way to do it. The G20 has tasked the Organisation for Economic Cooperation and Development to fix an international tax system that has seen some internet heavyweights take advantage of low-tax jurisdictions in places like Ireland and pay next to nothing in other countries where they make huge profits. OECD chief Angel Gurria presented G20 finance ministers and central bank chiefs meeting over the weekend in the western Japanese city of Fukuoka with a “roadmap”, already signed off by 129 countries, in a bid to clinch a long-term solution by 2020. Ministers are weighing a new tax policy based on the amount of business a company does in a country, not where it is headquartered. But there are rival proposals in the mix, including a wider US-led approach that could affect European and Asian multinationals in other sectors than technology. US Treasury Secretary Steven Mnuchin took a blunt view of policies in Britain and France, which have already introduced their own taxes on digital players, given a lack of global consensus. On the burning issue of the trade war between China and the US, the world’s top two economies, Mnuchin said Washington was prepared to continue talks but that any potential deal would be struck by the two leaders later this month.

Source: https://www.thedailystar.net/business/news/hurry-g20-urged-speed-digital-tax-1754407

Sluggish deposit growth poses stability risks: BB

The continued slowdown in deposit growth can go on to raise concerns of stability of the banking sector, said a Bangladesh Bank report in a pressing call to the government to cut down the interest rate on national savings certificates. Deposit growth in the banking sector has been tumbling in the last four years: in 2018 it stood at 9.80 percent, down from 10.60 percent a year earlier and 13.30 percent from four years earlier. And the large sales of national savings certificates, which come with higher interest rates than banks’ deposit products, has been blamed for the low deposit growth. In 2018 it stood at 14.10 percent, down from 18.90 percent a year earlier. The month of May saw a record amount of remittance flow for a single month as expatriate Bangladeshis sent $1.75 billion to ensure that their loved ones back home can celebrate Eid-ul-Fitr with more festivities. May’s receipts were up 22.43 percent from a year earlier and 16.64 percent from a month earlier. Last month’s inflows take the remittance receipts in the first 11 months of the fiscal year to $15.50 billion, up 11.74 percent year-on-year. Although the government did not cut the rate on its savings tools, it has tightened the policy for investment in the instruments, which will strengthen the banks’ liquidity base

Source: https://www.thedailystar.net/business/banking/news/sluggish-deposit-growth-poses-stability-risks-bb-1754398

Five VAT rates on cards

The government is likely to whittle down value-added tax rates to five from existing seven as it is getting ready to implement the new VAT law from the next fiscal year, seven years after its enactment. This means, the government will move away from a uniform 15 percent VAT rate envisaged in the VAT and Supplementary Duty Act 2012. The five rates are 2 percent, 5 percent, 7.5 percent, 10 percent and 15 percent. The multiple rates aim at reducing pressure on consumers and small businesses, according to officials. To offset the impact of revenue loss, the government is going to keep 15 percent VAT on various goods and services, by automating the VAT system, from July 1. Currently, 15 percent VAT is applicable on sectors such as cigarette and telecommunications and these two sectors account for more than 45 percent of the total VAT collection. So, a cut in the rate will cause VAT receipt to decline, said officials of the NBR. The NBR collects VAT on 84 products, including, powdered spices, biscuits, LP gas, paper, exercise books, bricks and rod based on tariff value, or administered value, in order to keep the prices of the items affordable to consumers. It realises VAT on 16 services based on truncated, or reduced rates of VAT. The tariff value and truncated value-based rates may not continue in the next fiscal year. As a result, the prices of a number of goods and services may go up. The VAT-free annual turnover limit would be increased to Tk 50 lakh from existing Tk 36 lakh. The ceiling of turnover tax is expected to go up to Tk 3 crore from Tk 80 lakh. The rate of turnover tax would be increased to 4 percent from 3 percent.

Source: https://www.thedailystar.net/business/news/five-vat-rates-cards-1754401