Loading...
The Financial Express

Bangladesh's tax receipts from large units plummet in July

| Updated: August 29, 2021 09:18:00


Illustrative photo Illustrative photo

Tax collection from Bangladesh's large manufacturing industries plummeted, registering a negative growth in VAT receipts in July, as a countrywide 'strict lockdown' for 18 days for checking corona transmission dealt them a stumbling blow.

Field-level tax officials said a significant part of revenue was lost for the lockdown, causing negative growth in VAT collection by 25 per cent in the month of July.

And national revenue collection in the first month of the current fiscal dropped 6.24 per cent compared to same month's last year.

Bangladesh had been hamstrung under a strict lockdown since July 23 till August 10, 2021 when the pandemic covid took an alarming turn.

Only export-oriented industries remained out of the purview of lockdown from August 1.

However, export-oriented industries are not considered revenue- generating because of their being exempted from paying taxes in many areas.

Production in the large manufacturing units remained suspended during the restrictions, affecting VAT collection, officials said.

In view of the situation, VAT-collection target from large taxpayers has been slashed by Tk 80 billion recently for the current fiscal year.

Businesses said their production process had been suspended during lockdown following instructions of the government and also for a decline in demand.

President of Dhaka Chamber of Commerce and Industry (DCCI) Rizwan Rahman said retail industries are the worst sufferers as consumer demand declined significantly during the time of home-stay.

"They managed to sustain after last year's lockdown with their hard-earned savings. But, this year they have nothing, forcing many shop-owners, travel agents, hotels become bankrupt," he added.

The chamber leader suggests the government should promote domestic tourism and local industry now, as world economies and trade have yet to recover fully from the covid shocks.

"It is appreciated that the government has been strongly backing the exporting sector to promote in this pandemic time, but it is high time to focus on local businesses or homegrown businesses to help them revive," he said about economic adaptation strategy.

And retail demand can only go up when business confidence will be back on the market, which is largely dependent on mass vaccination, he added.

"Until the whole of the country is vaccinated, it is very difficult to open up the whole economy entirely," he said.

Large taxpayers' unit (LTU) under the Value-Added Tax (VAT) lost Tk 25 billion during the last lockdown, officials said.

According to LTU's estimation, it has lost Tk 1.0 billion in VAT per day during the 18-day stay-at-home period as the British American Tobacco Bangladesh (BATB) company suspended its production at government's bidding.

BATB Managing Director Shezad Muneem, however, says it was their lean period for business and the company has been concentrating on maintenance.

He expressed optimism about recovery of the loss incurred due to lockdown.

President of the Foreign Investors Chamber of Commerce and Industry (FICCI) and Managing Director of Berger Paints, Bangladesh Rupali Chowdhury said they incurred huge loss due to closure of production.

"Sale of products remained suspended so its production went down eventually," she added.

LTU data reveal that it collected Tk 35 billion less in VAT from large taxpayers during the lockdown last year from March 26 to May 16, 2020.

It collected Tk 22 billion in July 2021, less than half its projected collection Tk 45 to Tk 48 billion.

In FY 21, the wing collected Tk 492.51 billion worth of VAT with a 17-percent growth.

Target for the VAT collection from large taxpayers has been set estimating 18-percent growth this year by revising the original target Tk 661.37 billion with a projected 34.29-percent growth.

Aggregate tax-revenue collection faced Tk 72.27-billion shortfall against its target in the month of July.

The VAT wing collected Tk 42.34 billion against its target for Tk 76.80 billion.

And the customs wing of the NBR collected Tk 48.66 billion, with a 3.0-percent negative growth, compared to the collection in the corresponding month last year. The target was Tk 74.56 billion.

However, income-tax collection grew 15 per cent in the month of July last largely because of upward revision in source tax in the budget for the current fiscal year.

The government has set a Tk 3.30-trillion target for the NBR in the FY 2021-2022.

[email protected]

Share if you like