NBR seeks FBCCI's help to boost collection

The revenue authority yesterday sought the apex trade body's help in collecting value-added tax from retailers and wholesalers.

The move comes as collection of VAT from wholesale and retail nosedived for a lack of compliance. 

In a letter to the Federation of Bangladesh Chambers of Commerce and Industry, the National Board of Revenue said VAT receipts from the segment stood at Tk 1,175 crore in the first eight months of the fiscal year.

In fiscal 2016-17, Tk 1,891 crore was collected from the segment, down 20 percent from a year earlier, according to the NBR.

“And collection is falling gradually,” said Hasan Mohammad Tarek Rikabder, first secretary for VAT policy at the NBR, in the letter requesting cooperation from business leaders to reverse the trend.

Officials said collection began falling after many traders became noncompliant in the wake of a sharp hike in package or fixed amount of VAT by the NBR in fiscal 2016-17. 

The revenue authority doubled the package VAT amount for shops in Dhaka North, South and Chittagong city corporations to Tk 28,000 a year in fiscal 2016-17 from Tk 14,000 the previous year.

For shops in other city corporation areas, the rate has also been doubled to Tk 20,000. The shops in municipalities were not spared either. The fixed VAT amount was doubled to Tk 7,000 for them from last fiscal year. In early November 2016, a large number of traders downed their shutters in Dhaka city demanding a cut in package VAT, which they say is too high.

The protest was called off eventually following assurance from the NBR higher ups of looking into the issue.

The rate, however, has neither been reduced nor hiked since then.

“We hope that collection will rise because of cooperation from representatives of businesses,” Rikabder said.

Contacted, FBCCI President Md Shafiul Islam Mohiuddin said his office would encourage businesses to pay VAT properly. 

“But the overall collection environment has to be improved to ensure that VAT paid by us is going to the state coffer and not to the pockets of dishonest officials.”

The collection capacity of revenue administration should be increased by introducing technology, he said.

“We have to prevent the scope of VAT going to the pockets of corrupt officials. We also have to come out of the practice of underhand dealings instead of collecting VAT.”