"I will not be surprised if the government raises the VAT level to 17.5 percent from existing 15 percent in the coming years," Khairuzzaman Chowdhury said at a seminar on 'Taxation policy in Bangladesh' in Dhaka.

Bangladesh University organised the seminar, which was presided over by university Vice Chancellor Quazi Azher Ali.

Chowdhury said the VAT is the only area from where more amount of income could be generated.

The NBR chairman expressed his optimism about fulfilment of the annual growth target of the tax-GDP ratio this year. He said the growth target for the fiscal 2005-06 was 0.5 percent which is likely to be fulfilled this fiscal year.

He said the current tax-GDP ratio is 10.09 percent which is very low compared to the ratio in neighbouring countries and the government is working hard to raise it at a reasonable level.

Criticising the existing tax laws, the NBR chairman said, "Our tax law is very weak. We have to be little more harsh." He said a reform measure is underway and it will take nearly five years to complete all the reform programmes.

Supporting replacement of existing pre-shipment inspection system by international companies, Chowdhury said some local companies are preparing themselves technically to improve their level for conducting pre shipment inspection.

The PSI is not a permanent system for inspecting goods in customs point, the chairman said adding that the government is working for setting up a separate office for inspection and valuation.