National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan on Thursday said the government is working to establish a tax structure that is free from discrimination, facilitates business growth, and applies uniformly to all.

“We have to get rid of the culture of tax exemption. It causes misuse and creates holes in the system,” he said while speaking at a pre-budget meeting at the conference room of the Revenue Building.

The current Value Added Tax (VAT) system is not near the actual spirit of the VAT system, he said.

“It should be an accounting-based system. If we pay VAT by calculating input and output, for some specific sectors it would be only 0.5 percent, effectively making it 2-2.5 percent,” he said.

The NBR chairman pointed out that the existing VAT rates of 5, 7.5, 10, and 15 percent are affecting businesses.

“The business community  invited this loss upon themselves  and now they are realising the pain,” he said.

He added that if business leaders agreed, NBR would reduce VAT to a single-digit rate.

Since VAT is imposed at multiple levels, consumers ultimately bear the burden through increased product prices, he noted.

“That means VAT has a direct connection with product prices,” he said.

If the government could implement VAT as per its principles, inflation might not have reached such high levels, said the NBR chairman.

The general point-to-point inflation rate in Bangladesh declined further in February, reaching 9.32 percent, down from 9.94 percent in January, according to the Bangladesh Bureau of Statistics (BBS).

The decline in inflation was primarily driven by a reduction in food prices. In February, point-to-point food inflation dropped to 9.24 percent from 10.72 percent in January, BBS data showed.

The NBR chairman stressed the need for discipline in VAT collection. “The country's revenue should come from VAT and income tax,” he said.

If the entire business ecosystem embraces VAT, no one will remain outside the VAT net, he added.