According to the Bangladesh Shop Owners Association, there are some 2.2 million shops and establishments in the country, of which the NBR has registered 350,000 for VAT payment
Back in 2018, the National Board of Revenue (NBR) took an initiative to set up free electronic fiscal devices (EFD) in shops across the country to ease collection of taxes.
But only 3,393 shops in the country had EFDs as of Saturday, said NBR Member of VAT Implementation and IT Abdul Mannan Sikder.
This is a very low figure considering that the number of small shops alone in the country have reached 560,000, according to the Bangladesh Institute of Development Studies (BIDS). And according to the Bangladesh Shop Owners Association, there are some 2.2 million shops and establishments in the country, of which the NBR has registered only 350,000 for VAT payment.
Earlier this year, the revenue board itself had targeted installing 10,000 EFDs by June 30, but they could not achieve that target due to the pandemic.
On the condition of anonymity, an NBR official told Dhaka Tribune that a Chinese company had been selected to supply the EFD machines.
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The revenue board was supposed to start implementing the initiative in April last year, but it was delayed due to Covid-19, he said.
“After the coronavirus came under control in China, in August of 2020, 80 EFD machines were initially set up in Dhaka and 20 in Chittagong as a pilot project. We were supposed to install EFDs in 10,000 shops by June, but the pandemic keeps pushing the initiative back,” the official further said.
As per the budget of the 2021-22 fiscal year, the government plans to collect Tk330,000 crore through NBR sources.
But a survey conducted by the VAT Intelligence Department from May 24 to May 31 this year found that 60% of shops in Dhaka do not pay taxes. And countrywide, the percentage of shops that do not pay taxes is even higher at 77.36%.
According to the Policy Research Institute (PRI), not only do the shops evade taxes, a large number do not even file returns.
“If every shop had VAT registration and was provided with EFDs, then the government would have seen a revenue turnover of Tk100,000 crore,” PRI Executive Director Ahsan H Mansur told Bangla Tribune recently.
He added that if the machines could be provided at union and village levels, the revenue turnover would have been Tk500,000 crore.
At a press conference in June, Bangladesh Shop Owners Association President Helal Uddin pointed out that the new VAT law had said NBR would install EFDs as soon as shops and establishments came under registration.
“In two years, they have been able to install only three thousand EFD machines in the country. As a result, the number of buyers has decreased in the shops which have EFD machines,” he added.
“At present 3,000 EFD machines have been installed in an unplanned manner by the NBR. I am proposing to use these 3,000 machines as a pilot project for any one sector — gold shops, tile shops, or hotels and restaurants across the country,” said the association’s president.
Jahirul Haque Bhuiyan, general secretary of the association, said: “If we could install EFD machines in 80-90% of the shops in the last two years, we would have been able to collect VAT from the consumers in one go.”
NBR Chairman Abu Hena Md Rahmatul Muneem recently told Dhaka Tribune that the agency’s officials are working on spreading awareness about VAT payment.
“Besides, they are working hard to collect revenue from those institutions. If EFDs can be installed at all the establishments, it will be possible to solve a lot of this problem. We want to stop the cat and mouse game between tax evaders and revenue collectors. We want businesspersons and the general people to voluntarily pay their taxes,” he added.
The revenue board had initially made Electronic Cash Registers (ECRs) mandatory in 2009, and later ordered to replace those with EFDs on August 9, 2018.
NBR issued an order in June 2019 to make the use of EFD compulsory in 25 sectors including hotels, restaurants, sweet shops, clothing stores, shopping malls, department stores, super shops, furniture shops, and jewellery shops.