To collect an advance tax of Tk2 per thousand on goods supplied to retailers, the National Board of Revenue (NBR) is moving to leverage information technology.
The agency has initiated the development of a specialized app for this purpose. The NBR’s IT wing has already begun work on the software, which is expected to be finalized for use starting next January, sources within the NBR revealed.
The budget for the current FY27 imposes a 0.2% advance tax on the supply of goods to retail vendors.
This means Tk2 will be deducted in advance for every Tk1,000 worth of supplied goods.
Although this provision has previously been kept in budgets, the NBR is now taking active steps to implement it.
Initially, this tax will be collected through the distributors of large manufacturing firms. Distributors will be required to use a dedicated app.
The app will maintain records of sales to retailers, issue receipts, and automatically generate e-invoices.
It will also feature options for receiving product payments. At the end of the month, based on sales records, distributors will deposit the advance tax—calculated at Tk2 per thousand—into the government treasury.
While the legal tax liability rests with the retailer, distributors will collect and deposit it on their behalf.
Arrangements are also being made to facilitate tax payments via mobile financial services (MFS).
According to NBR sources, the app will initially roll out exclusively for distributors, with plans to make its use mandatory for all wholesalers in phases.
To determine app development and implementation strategies, the NBR will soon hold discussions with the heads of sales departments from major corporations.
An NBR official, speaking on condition of anonymity, stated that distributors will ensure tax collection via the app since they are the direct users.
Therefore, gathering input from business representatives is essential.
To this end, detailed discussions will be held with them to finalize everything.
The official noted that merely building the app is not enough; unless businesses actually use it, securing tax collection will remain impossible.
Concerns among small businesses
According to industry insiders, there are currently around 7 million retail traders in the country.
Once fully implemented, this new system will bring a massive segment of retail businesses under the advance tax net.
However, the initiative has sparked anxiety among small-scale traders, who fear that compounding tax and registration requirements will drive up operational costs—costs that could ultimately trickle down to consumer prices.
Under the current fiscal year's budget, obtaining a Business Identification Number (BIN)—which is essentially a VAT registration number—has been made compulsory for small entrepreneurs and all business types to open bank accounts.
Consequently, many small business owners are forced to register for VAT just to open bank accounts.
Shafiqul Islam, a retail businessman, said: "Sales are dead. On top of that, the government is rolling out one rule after another. Retailers are facing losses and harassment."
Md Nazmul Hasan Mahmud, president of the Bangladesh Dokan Malik Samity, told Dhaka Tribune that small traders are being dragged into turnover taxes and forced to secure BINs, creating panic within the business community. Complaints are pouring in that traders cannot perform banking transactions due to a lack of BINs.
Mahmud further noted that according to VAT regulations, enterprises with an annual turnover of up to Tk35 lakh are exempt from VAT registration or BIN requirements—a point they have repeatedly raised through protests and human chains.
Highlighting the extra administrative overhead imposed on small businesses by VAT rules, he explained that a single shopkeeper is required to maintain five separate registers.
Giving an example, he cited a 100-square-foot shop where the owner works alongside two semi-literate employees. Hiring a dedicated accountant, purchasing a computer, allocating space for it, and paying the staff salary involves overhead costs that small retailers simply cannot afford.
