Revenue collection hurt by exemptions

VAT from LTU registers mere 1.36pc growth in Jul-Mar

Value-added tax (VAT) and supplementary duty (SD) waivers to some major sectors, like petroleum, telecommunication and tobacco, have posed a huge challenge before National Board of Revenue to meet the revenue collection target for the current fiscal year (FY) 2018-2019. According to official sources, the revenue authority incurred a massive shortfall amounting to Tk 10,369 crore in VAT collection in the first nine months of this fiscal just for the backwardness of its Large Taxpayer Unit (LTU).

During this period, the VAT wing collected a total of Tk 60,119 crore against the target of Tk 78,699 crore, lower by Tk 18,580 crore. The LTU, in general covers around 60 percent of the entire VAT revenue as it deals with the country’s top 157 giant companies and MNCs. The companies in the tobacco, telecommunication, beverage, medicine, cement, bank and insurance, ceramic, and gas distribution sectors are listed with the LTU.

According to NBR sources, the target for VAT from LTU in the FY19 is Tk 60,817 crore while the total VAT collection target is Tk110,000 crore. During the July-March period, LTU collected Tk 32,666 crore against the target of Tk 43,035 crore, an only 1.36 percent rise on a year-on-year basis. During this period, almost all other VAT Commissionerates performed well, but LTU’s sluggish collection faded the overall performance.

As per the first nine months estimation, Khulna Excise and VAT Commissionerate collected Tk 1590 crore, up 28 percent year-on-year rise. Besides, Jashore Commissionerate collected Tk 1332 crore, 24 percent up, Dhaka East Commissionerate Tk 1520 crore, up 20.16 percent, Dhaka North Commissionerate Tk 5755 crore, up 15.68 percent, and Dhaka South Commissionerate Tk 4716 crore, up 15 percent.

Most other Commissionerates also registered more than 10 percent year-on-year upgradation in VAT collection. Due to LTU’s poor performance, the overall growth during this tenure stood only at 6.83 percent. LTU sources said, due to the exemption of Supplementary Duty (SD) from gas and petroleum sector they, during that period, had to collect Tk 2,870 crore less.

NBR at the beginning of this fiscal, slashed the VAT on mobile internet from 15 percent to 5 percent, incurring a loss of Tk 520 crore. Besides, due to lower marketing of cigarette companies the revenue authority had to face a year-on-year reduction of Tk 2449 crore during the July-March period. In the last fiscal, LTU collected a total of Tk 45,020 crore against the target of Tk 45,889 crore, which was 21.73 percent rise year-on-year.

In the fiscal 2016-17, LTU collected Tk 36,984 crore, securing 21 percent growth on a year-on-year basis and the collection in the previous fiscal was Tk 30,417 crore, up 19 percent in the same way. A highly-placed LTU official, in this connection, told Bangladesh Post that they, at the beginning of the fiscal were given a gigantic target. Apart from this, the government offered exemptions from some big sectors, lowering the revenue collection.

According to NBR sources, there are 10 top companies from Tobacco, Gas distribution, and Telecommunication sectors from which NBR collects around 40-45 percent VAT. “In the current fiscal, most of the Companies from these sectors got either exemptions or their lowering of marketing, that is why revenue collection fell drastically,” the official said.