VOL NO REGD NO DA 1589

Sunday, October 02, 2005

HEADLINE

POLITICS & POLICIES

METRO & COUNTRY

VIEWS & REVIEWS

EDITORIAL

LETTER TO EDITOR

COMPANIES & FINANCE

BUSINESS & FINANCE

LEISURE & ENTERTAINMENT

MARKET & COMMODITIES

SPORTS

WORLD

 

FE Specials

FE Education

Urban Property

Monthly Roundup

FE IT

Saturday Feature

Asia/South Asia

 

Feature

13th SAARC SUMMIT DHAKA-2005

WOMEN & ECONOMY

57th Republic Day of India

US TRADE SHOW

 

 

 

Archive

Site Search

 

HOME

EDITORIAL
 
The same old story about VAT
10/2/2005
 

          THE government needs resources to meet its annual recurrent as well as development expenditures. Taxes and duties of all types are major sources of the government's revenue earning. Since revenue earning from taxes on income of individuals and profits earned by companies have been very low, the government, traditionally, has relied more on indirect taxes, notwithstanding the fact that the latter add to the miseries of the poor and less affluent sections of society.
Bangladesh was the first country in the region to levy value added tax (VAT) in 1991 as part of its economic reform programmes. This particular type of tax now constitutes about 35 per cent of the tax revenue mobilised annually by the National Board of Revenue (NBR). The tax on income and profit has only 19 per cent share in the NBR revenue. However, as in the case of income tax, the rate of evasion of VAT is also very high. In many cases, officials concerned work hand in glove with the traders and service providers to deprive the government of the regular amount of VAT. There are also incidents in which political clouts are used by some big companies to evade VAT. Had there been no evasion, the money received through VAT would have been several times more than what is being collected now.
The collection of VAT levied on traders at retail and wholesale levels has been very unsatisfactory. Instances are galore where the traders and service providers deliberately avoid payment of VAT to the government though they quite religiously collect the same from the buyers. The government tried a number of methods to reduce the extent of tax evasion during the last couple of years, but without any tangible outcome. For instance, the NBR collected only Tk. 450 million during the last fiscal as VAT from the traders at wholesale and retail levels as against the target of Tk 2.5 billion. Whenever the government wanted to be tough on the VAT evading retailers and wholesalers, the latter resorted to street agitation or closure of their shops and establishments. However, following the intermediation of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the apex trade body of the country, it was agreed that individual traders would pay VAT on the basis of their sales turnover instead of self-assessment system that was in force earlier. Both the FBCCI and the NBR agreed that committees comprising representatives of the business community and the NBR officials would fix the amount of VAT to be paid by the retail and wholesale traders. Committees were formed but there has been no change in the situation so far as the collection of VAT from retail and wholesale sources is concerned.
The NBR authorities have now decided not to use the services of the committees constituted and step up efforts for collecting VAT from the retailers and wholesalers registered with VAT offices across the country. The number of traders having VAT registration also appears to be very low. It seems that a large number of traders who are eligible for payment of VAT have avoided registration. The NBR, side by side with it efforts to collect VAT from all the registered traders, needs to bring in eligible traders within VAT network. The country which has to comply with a plethora of conditions attached to the external assistance cannot afford any large-scale evasion of taxes of any sort.

 

 
  More Headline
The same old story about VAT
Prevention of software piracy
Insurance industry in global market
Where pledges are not enough
 

Print this page | Mail this page | Save this page | Make this page my home page

About us  |  Contact us  |  Editor's panel  |  Career opportunity | Web Mail

 

 

 

 

Copy right @ financialexpress.com