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Tax intelligence unearthed five times higher VAT evasions, year on year, in the last fiscal year (FY 2020-21) despite pandemic-time exemptions.
According to an official statement released by the VAT Audit, Investigation and Intelligence wing of the NBR on Sunday said the VAT intelligence detected Tk 16.76 billion in unpaid value-added tax through conducting 233 investigations in FY 2020-21.
The government has received Tk 1.43 billion from VAT head, with penalty, through the search operation. Instant collection of evaded VAT also grew 2.5 per cent last year.
In FY 2019-20, the National Board of Revenue (NBR) unearthed VAT evasion worth Tk 3.19 billion and collected penal VAT amounting to Tk 570 million.
A year-end assessment of the VAT Audit, Investigation and Intelligence wing revealed the cases of collection of VAT by businesses from their customers and default on payment of the same to state coffers.
Talking to the FE Sunday, Director-General of the wing Dr Moinul Khan said they had found most of the VAT evasions intentional in their investigations.
"Businesses consider VAT as their profit margins. Most of the VAT evasions have been found in medium-scale businesses," he said.
Tendency of VAT evasion by large corporate houses got reduced significantly, he added.
He, however, said the VAT intelligence team has to drop many of its planned raids due to Covid pandemic.
After unearthing the VAT evasion, the intelligence team gave sufficient time to the businesses to furnish tenable reasons in their favour, he added.
The amount of evaded VAT has been finalised only after businesses admitting the allegations.
"Detection of the huge amount of VAT evasion proves that underhand dealings or connivance between VAT officials decreased significantly," he said.
The intelligence team conducted audit of 141 organisations and found evasions worth Tk 14.04 billion.
The intelligence wing detected the default on payment of VAT worth Tk 4.62 billion by Chittagong Port Authority (CPA), Tk 1.45 billion by Premier Bank ltd, Tk 1.25 billion by United Commercial Bank Ltd, Tk 1.0 billion by Basic Bank Ltd, Tk 495 million by Janata Bank Ltd, Tk 488 million by American Life Insurance company Ltd, Tk 442 million by Sonali Bank Ltd, Tk 263 million by ICB Capital Management Ltd, Tk 252 million by Delta Life Insurance Ltd, Tk 230 million by DPSSTS School, Tk 209 by Karishma Services Ltd, Tk 206 million by Lanka Bangla Finance Ltd, and Tk 212 million by Elite Paint and Chemical Industries Ltd. However, the entities that have defaulted on VAT payment might have disputed the wing's claim.
Through raid, confiscation of documents and physical inspections the team detected Tk 1.34 billion in evaded VAT. The organisations deposited VAT worth Tk 83 million instantly after detection.
Through raids, the VAT intelligence team unearthed evasions worth Tk 396 million by Akhtar Furnishers, Tk 389 million by Mohammadi Trading, Tk 303 million by Charuta Private Ltd, Tk 271 million by Uzala Paints Industry, Tk 169 million by Hotel Lakeshore, Tk 135 million by Food Village Plus, Tk 129 million by Food Village Ltd, DBL ceramics Ltd Tk 68 million, Khan Kitchen Ltd Tk 36 million, Sung Food Garden Tk 33 million.
In FY 21, the team conducted surveys on different retail markets inside and outside the capital. A total of 15,482 shops of 25 markets came under scrutiny during the drive.
They found a negligible number of businesses having VAT registration under the new VAT act.
In its drive from May 24 to 31, 2021, the team had conducted surveys in 17 markets and found 1,458 shops, or 77.36 per cent, without VAT registration out of 1,974.
Only 113 shops pay VAT over Tk 5,000 out of the total surveyed shops.
The VAT wing said it started investigations after the businesses adopted provisions of the new law.
Businesses evaded VAT by way of not depositing the amounts realised from the consumers with the public exchequer, says the wing which conducts audit and physical inspections to dig out such evasive acts.
Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president Md Jashim Uddin lamented that the NBR is imposing tax burden on existing taxpayers rather than expanding tax net.
"Distance between the NBR and businesses has widened for not taking participatory decision," he said.
"We submitted a proposal just after budget last June to revive the joint taskforce of NBR and FBCCI but yet to get any response from NBR," he added.
The chief of the apex trade body also suggested simplifying the VAT- collection system to encourage businesses to pay VAT.
Businesses are willing to install Electronic Fiscal Device (EFD) now, the NBR should expedite its distribution, he said.