No cut in VAT on beauty parlour services: NBR chairman

The value-added tax (VAT) on beauty parlour services would not be reduced in the upcoming national budget, Abu Hena Md Rahmatul Munim, chairman of the National Board of Revenue (NBR), said today.

He made the announcement in a pre-budget meeting organised by the Chittagong Chamber of Commerce and Industry at Bangabandhu Conference Hall of the World Trade Centre in the port city's Agrabad area.

Mentioning that VAT rates are fixed according to how much VAT can be taken from a consumer, the NBR chairman asked: "What is the VAT paying capacity of a person who goes to the beauty parlour?"

He said a person who can spend Tk 250 for a haircut would not feel any pressure for paying VAT.

"That is why I am announcing today that VAT will not be reduced from beauty parlour. There is no reason to reduce VAT."

Chittagong Chamber President Mahbubul Alam chaired the meeting where representatives of different business sectors were also present.

On the proposal for a cut in VAT on beauty parlour services placed by businesses the NBR chairman said: "Who pays VAT? Consumers pay VAT and you (businesses) collect it from the consumers and deposit it to the government."

Regarding a proposal to help the local producers of electric switch producers, the NBR chief said there is an allegation that the local producers produce low quality goods to reduce production costs.

The local producers cannot make good quality products if they do not grow capacity, he said.

"We will monitor the potential of the domestic industry and will assess how much support needs to be given at different stages."

The domestic industry needs to grow capacity gradually and they would continue to get support from the tax administrator, he opined.

The rise in the goods' international prices makes them costlier in the local markets, Munim said.

But it is not a normal practice to reduce the local prices of goods by reducing taxes, he said.

In the meeting, the Chittagong chamber president proposed raising the tax-free income limit for individuals, women, elderly, physically-impaired people and freedom fighters.

Alam said they already sent 206 proposals to the NBR, of which 84 proposals were related to duty, 22 on VAT and 102 on income tax.