LTU serves demand notices on big shots to pay VAT arrears

Revenue board's value-added tax (VAT) wing served demand notices on 37 large taxpayers to realise VAT arrears worth Tk 6.93 billion, against the backdrop of its target shortfalls.

Officials said among the VAT-payers, the state-owned Bangladesh Telecommunications Company Limited (BTCL) alone owes the highest amount, Tk 3.79 billion.

The large taxpayers unit (LTU) issued the demand notices under section 55(1) of the relevant law.

Three mobile-phone operators-Grameenphone, Robi and Banglalink-are also among the big shots who received demand notices for payment of arrears worth Tk 231 million, according to the first-quarter (July-September) report of the LTU under the VAT wing.

Among the other major VAT-payers, Premier Bank, New Zealand Dairy, Global Heavy Chemicals Limited, Shah Cement Industries, Modina Cement Limited, Shadharon Bima, Dhaka Electric Supply Company (DESCO), Power Development Board (PDB), Greendelta Insurance, and Reliance Insurance received the notices from the LTU.

The unit authorities found the arrears in VAT through scrutinizing and auditing the financial documents and VAT returns and other types of investigations and intelligence work.

As per strategic plan, the LTU has geared up its effort to realize "evaded" VAT through intensive audit.

The LTU's first-quarter report has stated a shortfall in revenue collection from cigarette manufacturing units worth Tk 4.76 billion against its target for the period.

The unit collected Tk 95.44 billion worth of VAT in the July-September period against its target for Tk 99.19 billion.

Aggregate collection shortfalls stood at Tk 3.75 billion for a large shortfall from cigarette manufacturing units.

Gas, cigarette and mobile sub sectors are the major revenue contributors to the unit.
Officials said the revenue-collection target has been set expecting Tk 35 Supplementary Duty (SD) on per stick of low-brand cigarettes for international companies.

However, an international cigarette company is paying Tk 27 like local cigarette companies due to absence of a Statutory Regulatory Order (SRO).

In the budget for FY 2017-18, the government has imposed two different rates of SD for local and international cigarette companies through issuing a special order.

Opposing such "discriminatory" tax structure, the particular international cigarette company is paying SD equal to that of local companies.

However, VAT collection from petroleum sector grew by 48.42 per cent in the Q1 as the unit received Tk 10 billion in arrear revenue from Petrobangla.

The unit collected Tk 27.59 billion in VAT against its target for Tk 25.96 billion.

VAT collection grew by 8.23 per cent, compared to same period in the previous FY, from the two large cigarette companies---British American Tobacco, Bangladesh (BATB) and Dhaka Tobacco Industries.

Target for the large tobacco companies has been set at Tk 42.90 billion for the July-September period. The unit collected Tk 38.14 billion from the companies.

VAT collection from mobile-phone sector increased to Tk 12.39 billion, posting a 26.58 per cent growth against its target for Tk 11.84 billion.

The tax collection from mobile sector was Tk 9.78 billion in the corresponding period last year.
"The unit has intensified efforts to collect the arrears and evaded VAT from its large taxpayers," said one official about the drive.

A large amount of VAT from the mobile-phone operators is under process of realisation.

On June 22, the appellate tribunal gave its verdict in favour of the government on realisation of Tk 20 billion in SIM-replacement tax from the cell-phone operators.

In the second phase, a total of Tk 8.83 billion including Tk 3.78 billion from Grameenphone, Tk 2.85 billion from Robi, Tk 1.68 billion from Banglalink and Tk 502 million from Airtel has been demanded as SIM-replacement tax.

Realising another sum of Tk 830 million in VAT for space rent of mobile companies, merger fees of Robi and Airtel worth Tk 910 million and Tk 792 million for Teletalk licence from Bangladesh Telecommunication Regulatory Commission (BTRC) is under process.

The unit has also decided to take legal action against Premier Bank Ltd for unpaid VAT worth Tk 620 million, the report said.

The LTU collected Tk 367.42 billion worth of VAT in Fiscal Year (FY) 2016-17, posting the highest growth about 20 per cent compared to revenue collection of last three years.

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