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The National Board of Revenue yesterday rolled out the electronic payment of value-added tax, taking a much-delayed big step forward to fully automating a system that would enable businesses to comply at reduced time and cost.
Initially, firms and companies that have accounts with HSBC, Prime Bank and Midland Bank will be able to pay the indirect tax without taking the trouble of visiting banks to have the job done.
By December, the revenue authorities aim to bring all the banks on board to facilitate the e-payment of VAT, the biggest source of revenue for the government accounting for 39 per cent of total tax collection.
“This will be considered as a milestone in VAT collection,” said NBR Chairman Abu Hena Md Rahmatul Muneem at the launch of the e-payment window for nearly 167,000 VAT-registered entities at his office.
Accountholders of Islami Bank and Bank Asia will most likely be able to do the job by the end of July, said Kazi Mostafizur Rahman, director of the VAT Online Project (VOP).
This has been the fourth major step taken by the revenue administration since it took up the VOP in 2013 to implement the VAT and Supplementary Duty 2012. The new VAT law came into effect from July 1 last year intending to improve compliance and increase the state’s revenue collection to finance expenditures.
Under the Tk 690-crore VOP, the NBR earlier introduced online registration for Business Identification Number (BIN), online return filing and taxpayer account as part of its plan to automate 16 modules.
With the introduction of the e-payment, businesses will be able to pay VAT, turnover tax, supplementary duty, penalty and interest to public exchequer directly from their bank accounts.
Under the process, firms will send instruction to their banks to clear the VAT. The bank will deposit the money with the Bangladesh Bank using the real-time gross settlement system.
The central bank will verify the balance of the taxpayers’ account and confirm to the bank about the transaction.
Simultaneously, the central bank will send transaction information to the NBR’s Integrated VAT Administration System (IVAS) and the government’s Integrated Budget & Accounting System, a fully automated web-based platform that captures and processes all government transactions as they take place.
Taxpayers will get payment confirmation from the IVAS as soon as the transaction is carried out.
The VAT-registered firms and individuals will show the e-invoice as proof of payment in their returns. The e-invoice will also be shown on the taxpayers’ accounts with the IVAS.
Last week, the revenue authorities said electronic invoices generated through the IVAS would be accepted as acknowledgement receipts for VAT payment to the treasury.
“I am much too excited about the online VAT payment system,” said Mohammad Muslim Chowdhury, the Comptroller and Auditor General, joining the event virtually.
“We have been moving around to automate the system but we are not giving a big push. This platform is creating a big boost,” he said, suggesting the NBR include all banks within six months to make the e-payment a success.
Finance Secretary Abdur Rouf Talukder, who also attended the event virtually, said the automated system would save time, reduce the scope of corruption and improve service delivery.
Financial Institutions Division Senior Secretary Md Ashadul Islam stressed on ensuring the sustainability of the system.
Automation is challenging, Muneem said.
He, however, said the NBR would gradually embrace digital platforms as part of its goal to automate the revenue administration.
“We will use digital technologies in various areas to ease customer’s service,” he said, adding that the NBR would pilot e-invoice for payment of personal income tax this fiscal year in the Tax Zone-4.
The NBR has plans to make e-challan (invoice) mandatory for personal income tax payment from the next fiscal year.
Over the years, the government has focused on automating its direct and indirect tax systems to ease the hassle of taxpayers, establish transparency and eliminate graft.
But the real thrust came in the last one decade thanks to the introduction of the scope for online registration for taxpayer’s identification number, almost full automation of customs systems, push for online filing of the tax return and establishment of an e-VAT administration.
Since the rollout of the online return filing for VAT in October last year, the NBR has seen a gradual increase in the number of filing: from nearly 3,000 from the first month to 42,000 now.
The VOP is providing training to taxpayers so that all businesses can file the return electronically.
“In future, we will make online return filing mandatory. Before that, we have to improve the system by addressing the error,” Muneem said.
The NBR is working to introduce an online platform — National Single Window — to facilitate trade and commerce and is trying to complete automation of bonded warehousing licencing system quickly.
However, as only four out of planned 16 modules for VAT system automation have been completed so far and just six months remain before the VOP comes to an end, the NBR chairman was asked if the tenure of the project would be extended.
“If needed, we will, of course, extend the deadline of the project to complete the rest of the modules,” Muneem said.
So far, Tk 238 crore out of the total cost of the project has been spent and a large chunk is likely to remain unspent.
The process to introduce the electronic fiscal device (EFD) has slowed in the wake of the coronavirus outbreak and the NBR would go for piloting of EFD from August.
“There is no alternative to automation to collect revenue. The whole world has moved towards automation. It will reduce the cost of collection and increase the amount of collection. We are active in introducing all sorts of digital systems to collect revenue,” the NBR chief said.
Bangladesh has the lowest tax-GDP ratio, a measure of a country’s capacity to fund expenses, in South Asia.
(TDS)
