Trade bodies call for fair treatment from NBR

A number of trade bodies yesterday asked the National Board of Revenue to strengthen surveillance and monitoring to ensure a level-playing field as many businesses continue to evade taxes and undercut their compliant competitors' prices.

“Many security service providers do not have VAT and tax registrations. These firms offer lower service charge to customers than those of us who have such registrations. As a result, our businesses suffer,” said Zahangir Alam, vice-president of Bangladesh Security Services Companies Owners Association.

There are around 700 security providers and many of these firms do not have VAT registrations, he said, adding that measures should be taken to force the non-compliant firms to get one.

A section of firms offer security services through trade licences that do not require mandatory VAT registration, Shah Alam Sarker, secretary general of BSSCOA, said.

The comments came on the first day of a pre-budget meeting between higher ups of the National Board of Revenue and representatives of various trade bodies at the tax authority's headquarters.

The revenue authority organised the meet in the run-up to the preparation of budget for fiscal 2015-16. 

Shaheed Serniabat, chairman of Bangladesh Mudran Shilpa Samity, an association of printers, said that 1,000-1500 printing firms out of 7,000 might have VAT registration.

The rest also have to pay but the money never makes it to the state coffer, he said.

He said printing firms cannot post more than 20 percent profit, but they still have to pay VAT at the time of purchasing the raw materials such as paper, inks, chemicals and other inputs. 

Subsequently, Serniabat went on to demand a 4 percent VAT on total value for the printing industry. 

The printers also demanded the hiking of duty on textbook imports to 25 percent from the existing 12 percent to safeguard the interests of the local printing sector.

In response, NBR Chairman Md Nojibur Rahman said his office would look into the accounts of both the compliant and non-compliant firms.  “We will see who are compliant and how much VAT you all are paying,” he said.

Placing proposals for the next budget, Md Zakir Hossain, general secretary of Bangladesh Supermarket Owners Association, said a 2 percent VAT is applicable for superstores, whereas many departmental stores and shops do not require collecting equal percentage of VAT from customers.

As a result, customers feel discouraged to shop from superstores, he said.

Hossain also called for reduction of duty on import of refrigerated vans, which are needed to carry the perishables such as vegetables and protect the produces from decaying.

The use of regular trucks and other vehicles causes up to 30 percent losses in the quality of vegetables, he said.

SA Quader Keron, chairman of Bangladesh Shop Owners Association, however, said many departmental stores have to pay package VAT on their total sales in absence of electronic cash registers.

As a result, these stores have to count taxes for products, including the VAT-exempted commodities, he said.

Package VAT is an indirect tax that groceries and shops have to pay depending on their annual turnover.

But the field level officials are now reluctant to collect package VAT, alleged Keron, adding that they demand a flat 15 percent VAT from shop owners.

“They also do not accept the report online. When employees are sent to the VAT office, they [the VAT officials] ask for owners instead. And when the owners come, the officials want to know how much money the owners will pay them,” said Keron.

In reply, NBR Chairman Nojibur Rahman said his office will take action against the officials once it gets detailed information regarding the allegation.

“I will send e-mail to field officials so that they do not harass businesses,” he said.

Akbaruddin Ahmad, president of Tour Operators of Bangladesh, said the tour operators incurred massive losses because of political violence since 2013.

He sought duty-free import benefit for tourist buses and other vehicles and tax holiday for up to seven years for the sector to recover from the losses and grow. He also demanded a reduction in VAT.

The Bangladesh Photographic Association too appealed for VAT rate cuts.

Md Farid Uddin, member of Customs Policy of NBR, said the level of VAT compliance is generally very poor except for 12 to 13 sectors.

He said it is true that the 15 percent VAT is high, but the level of compliance has to be improved in order to reduce VAT rate.