The National Board of Revenue (NBR) is moving away from the obligation imposed on banks for scrutiny of VAT returns to get its approval before disbursing loans to any businessman or company.
The revenue board issued a new directive revoking the previous order in this regard on Tuesday.
A notice – signed by Syed Mushfequr Rahman, director general of the VAT Audit, Intelligence and Investigation Directorate (VAT Intelligence) under the NBR – was sent to the Bangladesh Bank.
The notice said the previous order had been suspended to make it easier for everyone to get loans during the ongoing coronavirus pandemic and implementation of the stimulus packages announced by the government.
Earlier, the NBR sent a letter to the Bangladesh Bank, asking to get its approval before disbursing loans to any businessman or company from any scheduled bank.
Explaining the previous letter, the VAT Intelligence said that as part of the internal revenue collection strategy, the NBR asked the central bank to check borrower turnover information along with the statement that is given in the VAT return to the NBR.
At that time, the NBR pointed out that if any loan is disbursed to a business without its approval and then if the loan recipient's audit report is found inconsistent with its VAT return information, bank officials concerned will be charged over VAT evasion.
Syed Mushfequr Rahman, director general of the VAT Intelligence, said at that time that the government was being deprived of revenue because of this.
"The initiative has been taken to curb VAT evasion. Businessmen and bankers will not face any hassle over this decision. When a branch is sending a loan application to the bank's credit officer, they can just email us a copy. We will take a maximum of seven working days to provide clearance to banks," he said.
With regard to the previous order, bankers have demanded it be withdrawn, citing harassment of banks.
Businesses were also demanding withdrawal of the order. They claimed it would delay the loan process.