The 109 companies under the large taxpayers unit (LTU) paid Tk31,578 crore as value-added tax (VAT) from July-December of the 2024-25 fiscal year (FY), a fall of Tk402 crore or 1.25% year-on-year (YOY).
The VAT collected from LTU during the same period of FY24 amounted to Tk31,980 crore.
Among all the large firms that include cigarettes, cement, gas, hotels, pharmaceuticals, and soap, cigarettes remain the highest revenue-generating sector for the National Board of Revenue (NBR).
However, the NBR's total VAT revenue dropped by 5.45%, settling at Tk55,177 crore during the first half of FY25.
According to the latest NBR data, revenue collection from three major cigarette companies fell by Tk771 crore to Tk14,448 crore in the first six months of FY25. Revenue collection from these companies amounted to Tk15,219 crore during the same period of the previous fiscal year.
The NBR data also shows eighteen pharmaceutical companies contributed Tk2,132 crore in H1, down from Tk2,145 crore in H1 of FY24.
Meanwhile, soap manufacturers paid Tk269 crore during the same time, a decline from last year’s Tk305 crore.
Five luxury hotels contributed Tk50 crore in VAT during the first six months of FY25, a drop from the Tk67.2 crore collected in the same period of FY24. Five state-owned gas companies collected Tk352.2 crore in revenue, slightly lower than the Tk357.9 crore collected in the same period of last FY.
Nine cement companies pay VAT under the LTU-VAT office, and revenue collection from these companies decreased by over 6% YOY to Tk215 crore in the first half of the current fiscal year.
However, data shows that bank, insurance, mobile and beverage companies show some good signs.
17 LTU-VAT-registered commercial banks paid Tk2,491 crore during the first half of FY25, a 2% increase from the Tk2,443 crore paid in the same period of FY24.
On the other hand, six large insurance companies paid Tk13.5 crore, up from Tk12.9 crore last FY.
Meanwhile, mobile operators and four beverage companies saw an 8% increase over the last six months.
Data shows that NBR collected Tk156,419.49 crore from July to December of FY25, a negative growth of 0.99% from Tk157,988.90 crore collected during the same period of FY24.
The revenue collection target for the H1 of FY25 was set at Tk214,143.10 crore.
Besides VAT revenue, NBR’s income-tax and travel-tax collection marked 2.59% (Tk52,162.49 crore) growth and import-export taxes 0.61% (Tk49,080 crore) growth.
Tax hikes and higher revenue
The government significantly increased taxes on bank balances, beverage products, mobile phone talk time and internet usage in the last budget, which sector insiders believe contributed to VAT growth from these sectors.
However, despite a significant increase in cigarette prices and taxes in the last budget, collections from the sale of cigarettes decreased by Tk771 crore during the first half of FY25 compared to the same period of the previous FY.
The tobacco industry remains the government's highest revenue-generating sector. Three tobacco manufacturing companies generate half of the revenue collected by LTU-VAT.
Officials said the LTU-VAT office's revenue decline is rare, noting that VAT collection from large companies rose by 20% in the first half of FY24 compared to the same period of FY23.
“The July movement may have had a major impact on the NBR's revenue collection. However, this is not a new story of failure to meet the targets. We see it every year,” said Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD).
The economist advised NBR to stop revenue collection leakages, reduce the number of VAT exemptions, and prioritize digitalization instead of focusing only on increasing VAT.
