NBR to focus four ways to boost VAT earnings

Al Amin :
The National Board of Revenue (NBR) is prioritizing four ways to boost earnings from Value-Added Tax (VAT) in the forthcoming fiscal year.
The public exchequer has identified the ways as it will have to collect additional Tk 20,400 crore from the VAT wing in coming fiscal year to meet the condition of the International Monetary Fund (IMF), NBR officials said.

The ways are regular budgetary measures, restructuring cigarette taxation, withdrawal of tax exemptions from several sectors and finally increase in monitoring at the existing EFDs and SDCs, they said.

They said at least Tk 12,400 – Tk 13,500 crore will be collected through budgetary and regular measures, followed by Tk 5,500 – Tk 6,000 crore by restructuring cigarette taxation, Tk 1,000 – Tk 1,500 crore by withdrawal of exemption or imposition of taxes, and Tk 400 – Tk 500 crore from EFDs and SDCs.

But, stability in the import of raw materials and consuming goods, lessening the existing dollar crisis and maintaining normalcy in domestic production are required to achieve the projected VAT collection target, the officials said.
Besides, the NBR will also have to provide sufficient logistic supports and intensive training to attain the target, they added.
Experts also opined that the NBR will have to give more attention on VAT and Tax wings in the upcoming fiscal year to achieve the huge target as the revenue collection from customs wing may remain in slow pace till the end of the year due to the ongoing import restriction.
“NBR should have to focus more on VAT and income tax amidst the ongoing economic headwinds and soaring inflation,” Dr Abdur Razzaque, Chairman of the RAPID, told The New Nation on Monday.

In a recent meeting, the IMF mission also wanted to know the FY24 VAT measures that will be taken in the FY24 with quantification of revenue impacts, but the VAT wing could not share the exact information as it has no consumption data due to the presence of a huge informal economy.

Due to the repeatedly stressed by the IMF on the quantified revenue impacts of the fiscal measures, the NBR has finalised the report for FY24.

Considering the trend of collection till March 2023, it is expected that the revenue collection from VAT wing will stand at Tk 1,23,500 crore at the end of current fiscal year, which means an additional amount of Tk 20,400 crore needs to be collected in FY24 to achieve the target.
Around 40 per cent of total VAT revenue comes from the production sector and about 5 per cent comes from trade sector.

On the other hand, production sector is mostly dependent on imported raw materials whereas revenue from trade sector is dependent on import of consumable items as well as production of goods.

So, maintaining normalcy in production is very much needed to achieve the target, the NBR officials said.