Five of the biggest companies in Bangladesh, including three telecom giants, are allegedly responsible for 82% of VAT due to large taxpayer units (LTU) of the National Board of Revenue.
The NBR identified Petrobangla (Bangladesh Oil, Gas & Mineral Corporation), Grameenphone, Robi, British American Tobacco Bangladesh (BATB) and Banglalink for an overdue payment of around Tk29,000 crore in VAT, as of December 24.
NBR officials noted that there is currently Tk35,000 crore of LTU-VAT unaccounted for, with the bulk of it resting with the aforementioned companies. Some of the companies are contesting the VAT amounts in court.
The state-owned mineral resources agency stands accused of having avoided paying Tk21,823.86 crore in LTU-VAT as of November 2017. Of the total unpaid VAT, four Petrobangla subsidiaries account for Tk13,036.49 crore between July 2009 and March 2014. This amount was due to a 2009 SRO which imposed 55% VAT on the total sale of gas provided by international oil companies.
Ø Titas Gas Transmission and Distribution Company Limited Tk10,988.27 crore
Ø Bakhrabad Gas Distribution Company Limited Tk672.45 crore|
Ø Karnaphuli Gas Distribution Company Limited Tk1028.38 crore
Ø Jalalabad Gas Transmission and Distribution System Limited Tk347.39 crore
The other Tk8,787.37 crore is VAT unpaid over several periods of time between April 2014 and November 2017.
Petrobangla Chairman Abul Mansur Md Faizullah and Company Secretary Syed Ashfaquzzaman could not be reached for comments despite several attempts.
According to LTU-VAT officials, Grameenphone did not pay Tk2,125.54 crore in VAT – of which Tk1,484.51 crore is for SIM replacement tax, Tk45.24 crore in space rent tax, Tk452.53 crore in SIM tax and Tk143.26 crore in prohibited rebates.
Grameenphone’s Head of External Communications Sayed Talat Kamal told the Dhaka Tribune: “We have a number of ongoing disputes with NBR regarding SIM replacement tax and various other issues. They are being adjudicated by different courts and quasi-legal bodies. It is inappropriate to label disputes as tax evasion right now. Grameenphone will comply with the court’s ruling when it is delivered.”
The country’s largest mobile phone company paid Tk2,296.90 crore in VAT in the 2016-2017 fiscal year.
The Robi and Airtel merger, now known as Robi, owes Tk2,019.96 crore from SIM replacement tax, SIM tax, space rent, taking unlawful rebate and not paying interest on dues. Tk1,681.94 crore belongs to Robi and Tk338.02 crore belongs to Airtel.
In the 2016-2017 fiscal year, Robi and Airtel paid a total of Tk1,063.99 crore in VAT. Post-merger, Robi paid Tk333.30 crore between July and November 2017.
Ekram Kabir, Robi’s vice president communications and corporate responsibility, said: “There is no legal basis for any of the claims issued by the LTU.”
“The audit claim that has been raised is totally against general accounting principles and shows an absence of adequate knowledge or expertise of accounting standard.”
SIM replacement tax is a very old industry issue, he said.
“We had been reassured by the government that prior to 3G auction in 2013 that this issue would be resolved before the auction. After four years, we are still waiting with hope.
“We have legally claimed the rebate on VAT. Our claim is not at all illegal. NBR’s refusal, in this regard, doesn’t seem fair and defies the law of the land.”
Britsh-American Tobacco Bangladesh
BAT Bangladesh stands accused of not paying Tk1,924 crore in VAT between August 2009 and January 2013. According to LTU-VAT, the company declared medium-grade cigarettes as low-grade to avoid paying.
There are four grades of cigarettes and the revenue board fixes and realises VAT and other supplementary duties on the cigarettes based on their grade.
BATB External Communication Executive Md Fayez Ali told the Dhaka Tribune: “This is a sub-judicial matter. It is currently being scrutinised by the Appellate Division. We cannot comment on this out of respect for the law.”
In the 2016-2017 fiscal year, BATB paid Tk13,995.41 crore in VAT. Between July and November 2017, it paid Tk5,819.11 crore in VAT.
Banglalink has not paid Tk1,101.65 crore in VAT. Tk873.65 crore is from SIM replacement tax, Tk52.37 crore in space rent tax, Tk228 crore in SIM tax and Tk67.25 crore in unlawful rebates.
In response to a query, Banglalink sent an e-mail saying: “Banglalink complies with the prevailing laws of the country. We cannot comment on the matter since it is under legal purview.”
In the previous fiscal year, Banglalink paid Tk853.49 crore in VAT. Over the July-November 2017 period, the company paid out TK530.02 crore in VAT.
Biggest taxpayers owe the most VAT
LTU-VAT Commissioner Md Matiur Rahman told the Dhaka Tribune: “We are working to realise the outstanding VAT. We have issued demand notice and final demands on a case-by-case basis. A number of cases are pending before Appellate Tribunal and the High Court.”
He said the LTU-VAT has plans to realise at least Tk8,000 crore from the three mobile operators and Petrobangla through litigation within the current fiscal year.
“The proceedings of some cases at High Court are at final stage and we are hopeful to get verdict in favour of the government as the LTU-VAT previously won cases like these,” said Rahman.
There are 170 firms under the LTU-VAT and the unit collected Tk36,972.93 crore in VAT in the fiscal year 2016-17 with a year-on-year 21.55% growth, said the LTU-VAT Commissioner, adding: “We have set a target to collect Tk50,000 crore of VAT in this fiscal year 2017-18, with a year-on year growth of 36%.”