NBR to bring changes to VAT software

The National Board of Revenue is planning to bring changes to the VAT software so that firms can submit returns online in line with the VAT Act 1991, said a senior tax official yesterday.

Provisions for multiple rates of VAT, apart from the standard 15 percent VAT on goods and services, will be incorporated into the Integrated VAT Administration System (IVAS) software that is being developed to digitise the revenue administration.

The revenue authority mulls incorporating provisions of multiple VAT rates in the software after the government shelved for two years the enforcement of a new law in the face of opposition from businesses on grounds that small and medium businesses would find it hard to comply.

The government earlier planned to enforce the VAT and Supplementary Duty Act 2012 from the current fiscal through the digitisation of the VAT process and administration.

The IVAS software has been designed based on a uniform and single rate of 15 percent VAT in line with the new law instead of multiple rates under the existing VAT Act 1991, said Zakir Hossain, deputy project director of the VAT Online Project (VOP) of the NBR.

“We are preparing a proposal to bring changes to make the software compatible with the present law,” he said, adding that the proposal would be placed before high-ups for approval.

He said the provisions for reduced and package VAT rates would have to be included in the VAT return forms so that firms can file returns online.

“We will start working as soon as we get the nod. We plan to digitise the VAT system in line with the present law so that businesses can be prepared to comply with the new law two years later.”

The government took the scheme to digitise the VAT administration thanks to $60 million (nearly Tk 500 crore) interest-free credit from the World Bank.

Following the postponement of the implementation of the new law, a WB mission visited Dhaka mid-July this year to assess the progress in digitisation and modernisation of the VAT system.

Officials said the mission recommended continuation of the VAT digitisation processes. 

Until February, Tk 122 crore has been spent on the project, according to a finance ministry document.

Vietnam-based FPT Information Systems has been tasked with deploying and maintaining the IVAS.