VAT Intelligence finds government and private companies include banks, insurance agencies and financial institutions, among top evaders
A whopping total of Tk1,676 crore in value-added tax (VAT) was evaded by some 233 public and private organizations during the fiscal year 2020-21, an investigation by the VAT Audit, Investigation and Intelligence wing of the National Board of Revenue (NBR) uncovered recently.
The report consisted of audit findings and other inspection reports gathered from across the country, where names of various government and non-government organizations including banks, insurance and other financial institutions have come up in the list of top VAT evaders.
According to the report, of the 233 entities, Chittagong Port Authority (PCA) evaded Tk462.28 crore in VAT, followed by Premier Bank with Tk145.16 crore, United Commercial Bank Tk125.73 crore, Basic Bank Tk101.51 crore, Janata Bank Tk49.52 crore, American Life Insurance Company Limited Tk48.84 crore, and Sonali Bank avoided paying VAT of Tk44.27 crore.
Others included ICB Capital Management with Tk26 crore, Delta Life Insurance Tk25 crore, DPS STS School Tk23 crore, and Lanka Bangla Finance dodged Tk20 crore.
Moinul Khan, director general of the VAT Audit, Intelligence and Investigation Directorate, told Dhaka Tribune on Monday: “Last year, we conducted audits and on-spot operations in various organizations, where we found evidence of huge amounts of revenue evasion. Among them are various government and non-government organizations.”
"However, in this case, we received cooperation from everyone. Many of them have already deposited money. The rest will be deposited soon," he added.
In addition, report also said that another Tk134.6 crore of VAT evasion was uncovered through various sources, media reports, confidential allegations against individuals and preliminary investigations against certain organizations from the NBR
After financial discrepancies were found, the said companies deposited around Tk8.3 crore in the government treasury soon afterwards, the report also said.
On-spot inspections by VAT Intelligence also found ledger discrepancies, upon which companies paid VAT then and there.
Among these, organizations included Akhter Furniture, who paid Tk39.63 crore, Mohammadi Trading Tk38.99 crore, Charuta Private Limited Tk30.36 crore, Ujala Paints Tk27.14 crore, Hotel Lakeshore Tk16.98 crore, Food Village Plus Tk13.52 Crore and Food Village Limited Tk12.93 Crore, among others.
According to the VAT Intelligence Department, they have found VAT evasion in five ways during their investigations.
First, some of the registered companies showed low turnover in their monthly returns by concealing the details of their actual purchase of goods and sales of manufactured goods.
Second, some companies produced multiple annual chartered accountant (CA) reports, where it was found that actual accounting information was not disclosed to VAT authorities.
Third, many companies pay VAT on sales but do not deduct VAT applicable at source on expenses. This is a huge amount of VAT evasion.
Fourth, many are conducting their businesses without VAT registration.
According to the VAT Act, it is mandatory to get VAT registration before doing business. Some of them are illegally collecting VAT from the buyers without re-registration.
And fifth, some of them register for VAT but do not deposit the amount collected from consumers to the government treasury as per the law.
Some of them do not even issue VAT invoices properly.
The VAT Intelligence Department has investigated this in two ways. The organization selected and conducted audits by creating an annual audit program based on intelligence information.
The other was by conducting a search operation under Section 83 of the VAT Act.