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‘Full automation will cut VAT evasion to 10-15%’

  • Published at 10:24 pm December 21st, 2019
Syed Mushfequr Rahman Courtesy

“We will be able to lower the VAT evasion to 10-15% with the completion of automated VAT system,” said Syed Mushfequr Rahman, project director of VAT Online Project, in an exclusive interview with <strong>Dhaka <span style="color:red">Tribune</span></strong> ’s Belal Muntasir.

Rahaman also talked about current situation of implementing ‘Value Added Tax (VAT) and Supplementary Duty Act 2012’.  

Online VAT registration time and VAT week ended. How was the response?

 We got very good response from the VAT payers. About 120,000 businesspeople did online registration by the deadline of November 30. We launched online VAT return filing system in the VAT week and received 1,000 returns. I think this is huge success as finally we could start the process. 

What about the businesspeople who yet to come in online vat net? 

The businesspeople who did not register online cannot open letter of credits (LC) for import-exports. Their banking transactions will remain closed. We have already instructed banks in this regard. Besides, the businesses will not be able to generate valid invoices in their sales without online VAT registrations. 

Tell us about current status of the VAT and Supplementary Duty Act 2012

The new VAT law has been in effect since July 1 this year but some sections of the law are yet to be implemented for various reasons. In case of imports, we introduced input-output coefficient instead of price declaration of products. But importers are still paying VAT declaring the prices in some cases. 

Besides, the new VAT implementation is facing some difficulties at manufacturing level, such as assessing value addition in products, determining sale prices and counting rebates. However, we hope that we will be able to fix all the issues within a year.

What is the update on VAT system automation?

We have actually some lack there. We built all infrastructures but have to develop them more. Our computer centre, central server, disaster recovery centre are ready and about 400 VAT offices across the county are now connected to the NBR network now. Online VAT registration and return filling system has already been launched but we could not yet go for online VAT payments. Besides, technological integration with banks needs to be done.  

The main task of automation is to develop data analysis system for which we need 10-12 more modules, including risk management, audit and documents management. These will increase capability of VAT officials to check VAT evasion. The module are now under construction and it will take about one and a half year. 

When will you  able to install electronic fiscal devices (EFD) in shops? 

We are all set for piloting 10,000 electronic fiscal devices in business outlets within a month. Already a shipment of 100,000 devices reached Chittagong port. If the first 10,000 installations are successful, the rest 90,000 will be installed in phases. Besides, we have floated another tender for 100,000 EFDs. There are 30 to 40 lakh shops in the country and of them, some 7-8   lakh outlets need to use EFDs as per VAT law.   

Tell us about progress in use of VAT software by manufacturers

Unfortunately, our enforcement is weak here. We cannot come down heavily on businesspeople as they seek time to comply.

Finally, the NBR extended the time of using VAT software till December 31, this year. 

Will the automation stop VAT evasion? 

Actually protecting VAT evasion is associated with huge accounting process. We believe that we will be able to lower the VAT evasion to 10-15% with the automation. There will always be a segment of businesspeople who will try to evade VAT.   No country has 100% VAT collection.   If we get at least 80%, it will be huge indeed.

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