NBR refuses IMF prescription on VAT, income tax

The National Board of Revenue (NBR) has refused an IMF proposal to introduce joint audit system for income tax and VAT (value added services).
The refusal came when IMF South Asia Department Advisor Thomas R Rumbaugh advanced the proposal to the revenue officials at a meeting at NBR here yesterday.
“We have not accepted the proposal and told the IMF advisor that it is neither possible nor viable to introduce the system in Bangladesh,” Ali Ahmed, member (Income Tax) of NBR told the news agency emerging from the meeting.
He said Thomas who led the IMF team described the usefulness of the joint audit system for income tax and VAT. It would help get more information and detection of VAT and income tax dodgers, he added quoting Thomas.
“We have told him that VAT and income tax systems of the country are not all similar. VAT is day-to-day process while income tax return is an annual matter,” Ali Ahmed told the IMF team.
At one stage, the IMF team gave the example of Pakistan where, it said, the joint audit system for income tax and VAT was working.
“I told them Pakistan is under the military economy, but Bangladesh is not. There is something difference in military economy and other economies,” Ali Ahmed said.
About availability of information between the two revenue departments, the NBR member told the IMF team that the two departments were working in close cooperation.
“The information flow is quite alright,” he told the IMF delegation.
The IMF team also wanted to know about the ambitious target of income tax this year at Tk 10,838 crore.
“We have told them that the target is achievable and we are very much on track to achieve the target,” Ali Ahmed added.
He mentioned that the earning from income tax during the first two months of current fiscal stood at Tk 1,039 crore showing a growth of 58 percent.
The IMF team appreciated the performance of the Large Taxpayers Unit (LTU), which is the brainchild of the donor agency. In July and August, the growth rate of LTU is 60 percent and it has collected Tk 140 crore in July.
IMF is putting pressure on Bangladesh for a long time to initiate reforms in revenue management to increase the revenue collection saying that the tax-GDP ratio of Bangladesh is very low.
The tax-GDP ratio of the country in last fiscal was 10.30 percent.