The Financial Express

Proposal to reduce 'tax burden on vulnerable companies' rejected

| Updated: November 23, 2020 16:13:51

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The revenue board has dismissed a number of proposals from the Bangladesh Investment Development Authority (BIDA) that the latter feels would help ease doing business in the country.

In one proposal, the BIDA has suggested relaxing tax burden, in the form of VAT (value added tax), on financially-vulnerable companies.

It is not logical to relax VAT payment provision as the companies collect the indirect tax from consumers, the National Board of Revenue (NBR) said in an opinion sent to the BIDA.

The NBR said consumers shoulder the liabilities for the payment of VAT, which is deposited to the public exchequer by the companies.

Earlier, the BIDA had made the proposal to the NBR to improve the country's doing business indicator in the World Bank's ease of doing business index.

The NBR also declined to accept another BIDA's proposal for the submission of VAT returns on a quarterly basis instead of the existing monthly filing.

"The consumers pay VAT instantly just after obtaining any services or buying products. There are no difficulties for the submission of monthly returns showing the collected VAT," the NBR said.

As per the VAT law, the returns should be submitted every month by showing proper deposits of VAT, it added.

"It will not be logical to keep a provision for the quarterly submission of VAT returns as the NBR has to focus on keeping uninterrupted flow of revenue collection," it said.

The NBR has also ruled out another proposal from the BIDA regarding risk-based investigation while providing VAT registration.

As per the existing VAT rules and law, the NBR issued VAT registration within three days after primary scrutiny, the board said.

There is no logical reason for amending the existing process of VAT registration and introducing investigation system on the basis of percentage, it added.

The BIDA has proposed to conduct a risk-based audit and select 20 per cent of the total application to VAT registration.

It has proposed to issue the registration to the Registrar of Joint Stock Companies and Firms (RJSC)-registered companies in Dhaka and Chittagong within two days.

The BIDA made the proposals after it found the country's score in paying tax indicator of the WB report at 56.1 while India's score is 115, followed by Bhutan 15, Sri Lanka 142 and the Maldives 119, Malaysia 80, Thailand 68, Indonesia 81, Vietnam 109, Cambodia 138, and Singapore 7. In August, the global lender suspended its 'Ease of doing business' index after allegations of fraud emerged.

Officials said the VAT wing declined the proposals on logical grounds, but it has appointed officials to implement and monitor the BIDA's action plans related to the reduction of time for VAT refund and the implementation of online VAT returns filing and e-payment system.

There are four sub-indicators of paying tax indicator in the World Bank report, including the payments, time, total tax and contribution rate and post-filing index.

In Bangladesh, taxpayers have to make 33 payments each year while the number is 26.7 in South Asia and 10.3 in OECD's high-income country.

The process of tax payment needs 435 hours per year in the country. It is 273.5 hours in South Asian countries and 158.8 hours in OECD high-income countries.

Taxpayers contribute 33.4 per cent of their profit as tax in Bangladesh, lower than the South Asian average of 44 per cent.

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