Even though Grameen Bank has taken various charges, fees and commissions against the various instalment benefits of micro-credit activities, they have been accused of not paying the proper VAT to the state.
Two cases have been filed against Grameen Bank, one for irregularities of providing VATable services without registration and another is VAT evasion.
The information has come up in a recent investigation by the National Board of Revenue (NBR).
According to the NBR's VAT Intelligence Directorate report, Grameen Bank has been found to have evaded VAT and Tax of Tk 67 crore.
Jahangir Hossen Howlader, managing director of Grameen Bank, said: “People from the VAT office visited the bank and asked the officials to meet them on Tuesday, but did not say anything about the cases.”
“Grameen Bank has been enjoying VAT exemption as a social organisation. We will need to check whether the bank should pay VAT under new rules,” he added.
Furthermore, he said: “People in our accounts section can say better. We will pay VAT and taxes if necessary but this bank is owned by the poor and the pressure will be ultimately on them.”
Speaking to the Dhaka Tribune on Saturday, Moinul Khan, director-general of the VAT intelligence department, NBR said: “VAT detectives had uncovered VAT evasion of around Tk 66,98,60,629 by investigating Grameen Bank's business activities. A case has been filed against the bank under the VAT Act for finding evidence of VAT evasion. Besides, another irregularity case has been filed against Grameen Bank for providing VATable services without registration as per VAT Act.”
However, as a social organization, Grameen Bank has so far benefited from VAT exemption, but when asked about the reasons for the sudden allegations, he said: “The overall VAT evasion figure against them (Grameen Bank) in the investigation was even bigger. Of which, excise duty evasion of Tk400 crore was also a part of it but at the hearing, they were able to convince us about this.”
“After looking at the correct documents, we also deducted that money from the fine, however, the charges, fees and commissions charged against the provision of various services are partly VAT eligible. That has to be given to the government. Another part is the tax at source. And the amount payable against this VAT and tax has been fined,” he added.
The allegations
A VAT intelligence directorate team, headed by Deputy Director Nazmun Naher Kaisar, unearthed the “irregularities” after reviewing Grameen Bank’s accounts from January 2011 to December 2016.
The investigation found Grameen Bank has been offering banking and non-banking services under the S056 code since its inception, but it did not register in line with the VAT law.
Organizations supplying taxable goods and services must register for VAT in line with the law.
All banks and non-bank organizations must register regardless of their turnover.
A Statutory Regulatory Order stipulates that the law will be applicable to all organizations defined under the banks and financial institutions defined by the Bank Company Act and that offer banking and non-banking services in exchange for commission, fees or charge.
The VAT intelligence directorate says 15% VAT is payable on the commission, fees and charges collected by Grameen Bank on microcredit.
It is also supposed to pay tax at source for its expenses in line with the law.
It paid Tk34,910 in VAT against its income from 2011 to 2016, but it was supposed to pay about Tk30.3 crore, according to the investigation report by the VAT intelligence agents.
The bank will have to pay nearly Tk13.9 crore as 2% interest on the due VAT.
It has paid over Tk8.5 crore taxes at source, but it was supposed to pay about Tk23.9 crore.
The interest on the due tax at source is over Tk7.24 crore.
According to the investigation report, the total dues stand more than Tk66 crore.
