All large-scale businesses should come under LTU-VAT

Tell us about the latest status of revenue realisation by the LTU-VAT.

The large taxpayers unit for value-added tax (LTU-VAT) is different from the other twelve commissionerates under the National Board of Revenue (NBR) because of its operational process. The unit covered 56% of the total realised VAT in last fiscal year 2016-17. In FY17, LTU-VAT realised Tk36,972.93 crore with a year-on-year growth of 21.55%. For the current fiscal year, LTU-VAT targeted VAT collection of Tk50,000 crore with a 36% year-on-year growth. In the first five months of FY18, LTU-VAT collected Tk16,264.74 crore from 170 large businesses including cigarette manufacturers, mobile operators, gas companies, banks and pharmaceuticals. The trend of revenue realisation in five months has touched a year-on-year growth of 17.29%.

What is the speciality of your organisation?

The LTU-VAT is a function-based organisation. If you look into the other commissionerates, the litigation management department is a neglected department, while we have given utmost importance to the section. Besides, we have done multiple tasks including physically visiting organisations, analysing audit reports and profit-loss accounts, comparing bank accounts of firms with their returns and also looking into the life cycle of the companies.

How can revenue collection be increased?

The revenue board should have to take initiative in this regard. We from the unit have already sent out detailed plan on how the revenue collection could be increased from LTU-VAT. The most important thing is restructuring the list of firms under the purview of LTU. As per the revenue board’s selection criteria, firms paying Tk5 crore VAT for three consecutive years are eligible for listing with the LTU, along with its sister concerns and associated firms. Currently there are 170 such firms. But, of them 138 companies pay Tk5 crore or more, but there are 32 firms who pay less than Tk5 crore and of them 17 pay less than Tk1 crore. This means these 32 firms need to be scrapped from the LTU list. On the other hand, there are 227 firms outside of the LTU list who paid more than Tk5 crore as VAT, of them 42 companies are paying around Tk30 crore VAT per year. So, these firms could be included to the LTU list. The decision of restructuring the LTU list has been placed to the revenue board. I think the board should consider the decision quickly.

What kind of problems are you facing in running the unit?

There are two major problems in the operation of LTU-VAT. One is the lack of manpower and another the shortage of workspace. There are two vacant joint commissioner posts. If we could get one good and skilled joint commissioner, they along with their team would have been able to realize Tk1,200 crore additional revenue or at least the information on the evasion of such, within two months. We also need some computer operators, as we have to maintain a large number of tasks with big clients who are used to digitalization. If you look at our office space, it is not a good place to work. We are running out of space.

How did alternative dispute resolution (ADR) perform in 2017? Is it a neglected option for businesses?

You are right. People usually do not want to come to ADR, as they are misguided by vested quarters to go to court rather than ADR. But I personally have taken a number of initiatives to make people interested in ADR. In five months of FY18, seven applications were submitted to ADR and we collected Tk13.5 crore by resolving them. In this fiscal year, LTU-VAT has a target to realise Tk100 crore from ADR cases.

Some companies often claim that they are forced to pay the tax they did not collect from the clients. What’s your stance on this allegation?

It is very interesting a matter. It is the duty of the companies to collect VAT from their clients and pay the amount to the government exchequer, as it is government revenue. Here they play tricks to be competitive by excluding VAT and selling at a lower price. But you cannot exclude VAT. If the product is not VAT-free, the companies cannot make it so. If they say that they do not know the law, which is also a poor excuse.