According to the Bangladesh Institute of Development Studies (BIDS), there are over 560, 000 small shops across the country but statistics imply that despite charging customers, they do not deposit taxes in the state coffers
Shop owners all over the country are reportedly evading taxes worth millions, with a whopping 88% not even having VAT registration numbers.
According to the Bangladesh Institute of Development Studies (BIDS), there are over 560, 000 small shops across the country but statistics have shown that a majority of them do not file taxes despite charging customers.
According to the Policy Research Institute (PRI), not only do the shops evade taxes, a large number do not file their returns.
“If every shop had VAT registration and was provided with Electronic Fiscal Device (EFD), then the government would’ve seen a revenue turnover of Tk100,000 crore,” said PRI Executive Director Ahsan H Mansur
He added that if the machines could be provided at union and village levels, the revenue turnover would have been Tk500,000 crore.
Meanwhile, a survey by the VAT Intelligence Department from May 24-31 discovered that of the 2,133 shops visited in Dhaka and its outskirts, only 482 had registered business identification numbers (BIN).
It also became evident that four out of five shops whose daily transactions were over Tk1 lakh per day did not have VAT registration or (BIN) numbers.
According to NBR, there are currently 800,000 entities in the country with VAT registration numbers, among which 96,000 pay VAT online and around 22,000 manually.
On average over 6,500,000, around 88%, shops evade taxes which also implies that even if they are charging VAT from customers, it is not deposited in the state coffers.
“The shop owners are reluctant to pay taxes to the government, especially those outside Dhaka,” said VAT Intelligence Department chief Dr Mainul Khan.
Sources said that shops in the divisional and upazila levels, easily traded Tk20,000 per day while the ones in the cities had daily transactions of over Tk1 lakh. Then there were shops which had business worth Tk10-20 lakh every day but the government had not been able to receive any revenue from them.
Meanwhile, Bangladesh Shop Owners Association chief Helal Uddin says that while a large number of owners did not pay taxes, they intended to do so.
“The shops do want to pay taxes. If they are provided with EFDs, then they’ll all pay taxes,” he said.
He says as long as NBR is not able to bring 80-90% of shops or traders in all sectors under the coverage of Electronic Fiscal Device (EFD) machines, VAT collection at the source level will have to be arranged as an alternative.
The trade body noted that the NBR had already registered 350,000 shops and establishments but 300,000 were not aware that they had been brought under registration.
According to NBR, in the last fiscal year, the government collected Tk 93,060 crore in VAT, half of which was contributed by 110 big organizations while most small businesses were evading taxes.