Written by The Banking Post
The government may revisit the existing VAT and turnover tax structure for the jewellery business, with an eye on fair taxation and stronger compliance, National Board of Revenue Chairman Md Abdur Rahman Khan said on Wednesday.
Speaking at a dialogue with Bangladesh Jewellery Samity, he said VAT should be applied on actual value addition, with full input tax credit, so that the effective tax burden remains reasonable. Arbitrary rates, he noted, discourage compliance and are difficult to enforce.
The NBR is open to amending laws—possibly in the next finance act—if the sector can propose a rational VAT formula based on value addition. Similar flexibility could be considered for the current 1 per cent minimum turnover tax, provided a transparent and reliable transaction-recording system is put in place.
He agreed with traders that imposing VAT on the full sales value of high-priced items such as gold ornaments is impractical, as value addition largely comes from labour or making charges rather than the metal itself.
Restoring discipline in the jewellery trade is essential for revenue mobilisation, rule of law and long-term sustainability of the sector, he said, adding that businesses should be able to operate with clarity and transparency while authorities facilitate compliance.
Despite being one of the country’s oldest trades, the jewellery sector remains largely informal. Although gold import rules have gradually been liberalised—moving from strict controls to formal policies with fixed duties—official data still show negligible formal imports, even as the market remains well supplied.
This disconnect between records and reality, he said, undermines governance and fuels smuggling, exposing traders to financial and legal risks.
To address this, the NBR plans to move toward real-time transaction recording. The revenue authority is ready to develop simple, sector-specific digital software for jewellery shops, especially small businesses, to ensure accurate reporting.
Once accounts become transparent and verifiable, the reliance on presumptive or turnover-based taxes can be reduced, allowing income tax to be assessed on actual profits or losses.
On import facilitation, he said greater openness and competition would help improve discipline. Issues related to import licensing, LC opening and banking procedures could be taken up with Bangladesh Bank and the Ministry of Commerce if traders submit formal proposals.
He also reaffirmed the principle of duty drawback for exporters, noting that duties paid on imported raw materials used in exports should be refunded, and any procedural bottlenecks would be reviewed.
Discipline in the jewellery sector, he said, is not only about revenue but also about protecting livelihoods and future generations from the risks of illegal trade.
