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As a step to raise internal revenue collection, the National Board of Revenue (NBR) has again taken the initiative to install Electronic Fiscal Device (EFD) and Sales Data Controller (SDC) or value-added tax (VAT) machines in different types of business entities, such as department stores.
The cabinet committee on economic affairs has already given in-principle approval to this decision of NBR on Wednesday (August 31). Finance Minister AHM Mustafa Kamal presided over the meeting.
The vendors will be selected through a government tender.
In this plan, 300,000 EFDs will be installed in three regions of the country : Dhaka Metropolitan, North and West outside Dhaka and Chittagong Customs Area.
Requesting anonymity, an official of NBR told Dhaka Tribune: “A large amount of VAT evasion happens at the retail and wholesale levels. If we can do it properly, the collection from this sector will increase several times and this will be possible if all businesses at the retail and wholesale levels can be brought under this system.”
A total of 10,000 EFDs have been planned to be installed in various businesses by June 2023. As a result of this step, VAT collection is expected to reach the desired level by 2026, the official also added.
Regarding the matter, Cabinet Division’s Additional Secretary Md Abdul Barik informed that NBR, under the Internal Resources Division (IRD) will provide EFD-SDC machines across the country to increase the revenue collection of the government.
In-principle approval has already been given for the use of EFD-SDC machines and the appointment of service vendors for data collection of VAT collected at the retail level.
“Our VAT commissioners will appoint the vendor and they will collect data and give it to the NBR. Three lakh machines will be installed in three regions in phases. Vendor selection will be through tender and the agreement with the government will be only for the service charge as to what percentage they will charge,” he explained.
While answering a question regarding who will pay the price of the machine, he said: “The price of the machine will be paid by the vendors. VAT will be credited to the government sector. The government will only account and train the vendors on how to collect VAT and operate the machines.”
The additional secretary also said it’s not possible for the government to operate so many machines across the country, which is why service outsourcing is being done by hiring vendors.
However, installation of EFD machines started two years ago but there is not much speed in its operation.
With the aim of increasing revenue collection in retail and wholesale businesses, the modern electronic fiscal device system was introduced for the first time in the budget of the fiscal year 2020-21.
The NBR official said that due to Covid-19, there was a slowdown in progress but significant progress will be visible in the current year.
A total of 10,000 EFDs have been planned to be installed in various businesses by June 2023.
60% of shops in Dhaka don’t pay taxes
According to the survey conducted by the VAT Intelligence Department from May 24th to 31st last year, a total of 2,133 shops were visited in Dhaka and its outskirts, and only 482 were found to have registered business identification numbers (BIN).
This means that the remaining 1,651 establishments did not pay their taxes, a whopping 77.36%.
This also implies that even if they took value-added tax (VAT) from customers, it was not deposited to the state coffers.
Meanwhile, 428 out of 1,064 shops from eight upscale shopping malls in the capital paid taxes, 40% of the capital’s total, leaving 60% out of the tax net.
(DT)
