NBR walks rear on order seeking information to sniff out VAT evasion
The VAT Cleverness yesterday withdrew its directive that had asked banks to supply information on discrepancies in turnover figures displayed by potential borrowers in returns and total annual financial statements.
The move came less than two weeks following the directive was issued, apparently as a result of pressure from certain businesses.
Hours following the development, the National Table of Earnings (NBR) transferred nine commissioners of VAT and customs, including Syed Mushfequr Rahman, the director-basic of the VAT Audit, Cleverness and Investigation Directorate (VATAIID). Rahman signed the letter.
Rahman has been transferred to the VAT Commissionerate Dhaka West. He previously headed the VAT Online Job before his assignment as the DG of the VAT Intelligence at the end of last year.
The NBR field office experienced asked banks to examine records from loan candidates and alert them if any discrepancies are located.
On June 18, the VAT Intelligence office issued the letter to the central lender and copied the letter to chief executives of banks in a bid to discover evasion and increase assortment of the indirect taxes, the largest source of earnings for the government.
In the letter, the wing said businesses furnish their purchase-sales in addition to data of economic transactions within their returns submitted to the field offices of VAT. And the federal government becomes alert to payable and deposited levels of VAT through the returns.
"So, the go back is an extremely important document beneath the VAT legislation and consistency between information provided found in the VAT returns and gross annual financial statements is vital," said the letter.
However, the letter explained, during an audit of commercial actions by firms, a discrepancy between total annual financial statements/audit article and sales data shown in VAT returns is normally found.
"Due to such actions by taxpayers, actual turnover remains undeclared and the federal government is deprived of a proper amount of earnings which is undesirable," explained the letter, adding these sorts of actions are a clear violation of the VAT and Supplementary Duty Action 2012 and the Financial Reporting Act 2015.
The VAT Cleverness office cited the anomalies between VAT returns and financial statements and called on banks to examine the documents while considering loan applications of taxpayers.
Similarly, it asked lenders to see it instantly in case of detection of any dissimilarity in turnover figures and warned that bankers would be responsible if any anomalies are detected later.
Yesterday, the VAT Audit Cleverness office said the prior directive was released as a part of its technique to increase revenue collection.
However, it is vital to keep carefully the wheel of the market rolling through the pandemic. Additionally it is important for all to be mindful so that taxpayers usually do not face any issue, said the VAT intelligence office.
The field office of the NBR said it cancelled the previous directive given the coronavirus pandemic so that businesses could avail the government-declared stimulus package easily and trade and economic activities can return to normalcy.
Rahman refused to comment.
On the other hand, Ahsan H Mansur, executive director of the Insurance plan Exploration Institute of Bangladesh, said revenue flow could have increased drastically had the initiative prevailed because firms would need to show the actual photo to get loans.
He, even so, said it isn't the responsibility of banks to do what the VAT division needs to do.
"They (NBR) want to do their unique jobs. They have to do their individual homework. If required, they can ask banks for info on picked cases, not on a low cost basis. Which is done based on authorization from the Bangladesh Lender."
"A strong lobby might have worked against the approach. They could have exerted strain on the NBR to avoid the move actually before a clarification comes from the central bank."
The NBR and the central lender should take an initiative to create loans sanctionable predicated on declarations made by taxpayers in tax and VAT returns, the former economist of the International Monetary Fund said.
Other countries, like the US, provide loans predicated on income and revenue reported in taxation statements, he said, adding that the NBR should write to the BB on this regard.
Syed Mahbubur Rahman, managing director & CEO of Mutual Trust Bank Ltd welcomed the NBR's decision.
VAT is the biggest supply of income collection and the officials beneath the department were assigned to gather Tk 108,600 crore out from the total revised focus on of Tk 300,500 crore for fiscal 2019-20, which ended yesterday.
Collection of indirect taxes fell found in the July-May period because of a slump running a business activities following a coronavirus outbreak. VAT collection dropped 1.26 % year-on-year to Tk 75,900 crore through the period.
For fiscal 2020-21, the government has given VAT officials the mark to acquire Tk 125,160 crore, up 14 % from the prior year.
