Leaden-footed NBR sitting on Tk 800cr of VAT refunds
The ongoing pandemic stands to leave a lasting legacy of bankruptcies and redundancies. Which is why, government all over the world are scrambling to prop up their businesses as much and as fast as they can.
One of the ways they are helping bleeding businesses is by accelerating tax and value-added tax refunds.
But over in Bangladesh, the response from the state appears to be rather leaden-footed.
Businesses are yet to get the refund of advance tax (AT) although more than 10 months have passed since the revenue authority levied the fiscal measure on the import of goods by firms, said industry operators.
Refund claims involving at least Tk 800 crore related to AT are pending at the field offices of VAT.
In December, BSRM, one of the largest steel mills in Bangladesh, applied for a refund for July, but it hasn't got the money back yet.
The fund is blocked, which would have come in handy in the current scenario, said Aameir Alihussain, managing director of the steel-maker.
His reaction comes as the country's burgeoning steel industry came to a halt as sales tumbled because of the shutdown.
Sales have dipped 70 per cent as almost all construction activities have stopped.
"We are paying more VAT in advance than we collect from customers. But there is no refund system yet."
Alihussain went on to raise questions about the rationale behind the AT in the first place.
"It is not logical. Crores of our working capital are being blocked. It increases our financial cost and it is not helping us to be efficient."
The tax should be removed immediately because it affects businesses unnecessarily, he added.
About Tk 90 crore of refund claims made by TK Group has been pending since it applied in January, said Md Shafiul Ather Taslim, director for finance of the leading commodity importer and processor.
"We have not collected bills in the last two months owing to the coronavirus crisis. It would be helpful to meet operational expenses if we are reimbursed quickly," he added.
Imposed for the first time in July under the new VAT system, the AT would be adjustable with the total payable VAT in their returns and the tax paid in excess would be refunded to businesses, according to the NBR.
It levied the tax to ensure that firms maintain records of sales and purchases properly to adjust or seek refund against imported goods. The idea is to widen the VAT net and curb the scope of money laundering through trade mis-invoicing.
In reality, AT refund process has remained cumbersome and difficult although the fiscal year is coming to a close within one and a half months.
Contacted, Abdul Mannan Shikder, a member for VAT at the revenue board, said: "We have already issued a letter to all commissioners to pay the undisputed refunds. And they are doing it."
The field offices have been instructed to give feedback within 15 days, he added.
In practice, there has been little progress.
One of the agencies that received applications but could not reimburse is the Jashore VAT Commissionerate.
"This is because there are errors in applications," said Zakir Hossain, commissioner of the office, adding that he is targeting to complete all the applications within May.
A senior official of the Dhaka North VAT Commissionerate said the field office would initially clear refund claims of VAT-exempted sectors such as poultry and fish feed.
Until January, it received more than Tk 180 crore AT refund claims.
The field office is yet to complete its procedures with the Bangladesh Bank and the Office of the Controller General of Accounts (CGA) to start processing refund claims, said Md Shawkat Hossain, commissioner of the Dhaka East VAT Commissionerate.
As per rule, each commissionerate of VAT has to open an account at the BB through the CGA office. After the account opening, VAT offices are given cheque so that they can issue a refund to businesses.
The Dhaka East VAT Commissionerate sent a letter to expedite the matter of opening an account and issuance of cheques to settle the refund claims, Hossain said.
"We will go to the CGA office once the offices reopen," he said, adding that nearly Tk 100 crore of refund claims are pending at the field office.
The Chattogram VAT Commissionerate is also facing a similar problem, with more than Tk 500 crore AT refund claims from ship-breaking yards and ship scraps and large importers.
"We applied to the accounts office nearly three months ago so that it recommends the central bank to open an account. It is yet to be settled," said Mohammed Enamul Hoque, commissioner of the VAT Commissionerate Chattogram.
The office has completed the paper works for 16 applications involving refund claims for Tk 112 crore.
City Group would have benefited if the refund claims were settled fast, said Biswajit Saha, its director for corporate and regulatory affairs. The group has filed refund claims of Tk 127 crore.
GPH Ispat applied for a refund of Tk 25 crore, said its Managing Director Mohammed Jahangir Alam.
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