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20 June, 2018 00:00 00 AM / LAST MODIFIED: 20 June, 2018 12:57:59 AM
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Increased VAT on furniture dismays industry players

Sharif Ahmed
Increased VAT on furniture 
dismays industry players

The value added tax, which is an indirect tax, to be paid for selling and manufacturing furniture is going to increase to 5 and 7 per cent from the earlier rates of 4 and 6 per cent respectively. This will put extra pressure on buyers, say industry insiders.

Selim H Rahman, president of the Bangladesh Furniture Shilpa Malik Samity, told The Independent this would put extra burden on consumers. “We're already under pressure as the dollar has gone up against our currency. Besides, we've to import raw materials from abroad and so production cost has also gone up,” he said.  

“Currently, we give 15 per cent VAT on importing raw materials, 6 per cent on manufacturing and impose 5 per cent VAT on consumers. So, the product value will increase if the new VAT is imposed and eventually this will have to be borne by consumers,” he explained.

“The domestic furniture market has been growing at a rate of 15–20 per cent a year. We've also started exporting furniture. We urge the government to reinstate the previous VAT rate,” he said.       

On June 7, finance minister AMA Muhith presented the budget proposal for FY2018-19. He announced that the VAT on selling furniture would be 5 per cent instead of 4 per cent, while the VAT on manufacturing of furniture would be 7 per cent instead of 6 per cent.    

“Globally, China has been the furniture-sourcing country for three decades because they can offer great designs at low prices. But Chinese labour cost has gone up and they are shifting towards high-tech industries. This ia a huge opportunity for us to capture the global market,” said Rahman.

Rahman, who is also the managing director of Hatil Furniture, said: “Our furniture is being exported to the Middle East, Canada, Nepal, Bhutan, India, Malaysia, the US, Belgium and other European countries. The products have become popular because of their quality and innovative designs.”    

Hatil Furniture exports products worth around USD 250,000 to the Middle East, Canada, Nepal and Bhutan every month, he added.

The furniture industry got off to a humble start as cottage industry. But after the mid-90s, it graduated to a full-fledged industry, he noted.

Md Hedayetullah Lablu, zonal manager of Nadia Furniture, said: “The furniture market is price-sensitive and the new VAT will definitely hinder its growth."

Dr Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), said the extra tax burden would affect middle- and lower-income groups.

He suggested a cut in the VAT rates to ease the tax burden on people. The government usually does this only because of revenue purpose, he added.  

 

 

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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