While activities of various government offices have lost pace amid the economic slowdown in the wake of the Covid-19 outbreak since March, the Cumilla and Jashore field offices of the National Board of Revenue (NBR) have attained outstanding success in automating the VAT system.
According to the NBR, over 90% of businesses with Business Identification Numbers (BINs) under the Customs Excise and VAT commissionerates in Cumilla and Jashore submitted their VAT returns as of August this year.
However, the overall picture of VAT automation in the country shows that only 29.61% of firms having BINs submitted their returns online by this time.
In terms of online VAT submission, the success rate of the commissionerates in Dhaka and Chattogram is less than 20% on average. Meanwhile, less than 10% of registered businesses under the Dhaka North and South commissionerates have been brought under the automated VAT system thus far.
Secrets to success
By making 91.07% businesses under his commissionerate submit their VAT returns online, Cumilla's Belal Hossain Chowdhury is obviously the most successful customs, excise and VAT commissioner in the country.
He told The Business Standard that returns have to be collected from taxpayers. "Ignoring the risks during the coronavirus situation, the officers of the commissionerate went door to door from the morning till 10 o'clock at night to persuade taxpayers to file returns online. They practically taught the taxpayers how to submit VAT online," he added.
We have been able to make taxpayers understand that automation will benefit both the taxpayers and the government
"We have been able to make taxpayers understand that automation will benefit both the taxpayers and the government," he claimed.
An official of the Cumilla commissionerate said officials held a number of virtual conferences to let taxpayers know how an automated VAT return system ensures transparency of accounts and respite from various kinds of harassment.
Jashore VAT Commissioner Md Zakir Hossain also said they have been able to make businessmen realise the benefits of submitting VAT returns online through counselling and door-to-door visits by commisionerate officials.
"We contacted all registered businesses at their addresses and taught them how to submit returns online. As a result, VAT collection is also on the rise," he said.
Overall scene is different
Sources said the NBR took an initiative to automate the VAT system, a major source of revenue, back in 2012. Seven years after formulating the Value Added Tax and Supplementary Duty Act-2012, the revenue board launched online VAT registration services in 2019.
At the end of last year, the revenue authority started to collect VAT returns online. However, the field offices could not achieve much success in this regard due to the novel coronavirus pandemic.
An analysis of the NBR's VAT automation scene reveals that 184,755 businesses obtained e-BINs till August 31 this year, after the start of the online registration service and coming out of the manual system. Of them, only 29.61% or 54,724 firms submitted their returns online.
Dhaka most backward
The Sylhet Customs, Excise and VAT Commissionerate comes after Cumilla and Jashore in terms of success in VAT automation. This field office of the NBR has brought 79% of the total number of registered business institutions under the coverage of the online VAT system.
The South and North commissionerates in Dhaka are at the bottom of the list, having been able to bring a niggardly 8.49% of the registered businesses under automation.
Pandemic deals the blow
An official of the Dhaka North Commissionerate said on condition of anonymity that several districts outside Dhaka, including Gazipur, Narsingdi, Narayanganj and Faridpur, are under the Dhaka commissionerate and so officials could not visit all the business institutions and exert pressure on them due to the coronavirus situation.
As a result, a large segment of the businesses could not be brought under automation, he added.
The NBR started accepting VAT returns online from December last year to alleviate the sufferings of taxpayers. According to the announcement, VAT returns through online were made mandatory for all businesses from July 1, 2020 – the beginning of the fiscal year 2020-21.
However, the NBR continues to accept returns through the manual system, as the pandemic has pushed all activities to a grinding halt.
Jamal Hossain, member of the NBR's VAT Implementation and IT wing, told The Business Standard that the main task of the NBR is to increase tax registration and returns.
We are working hard to make this work online. This process is being delayed a bit since VAT returns submissions through online are not mandatory for export-oriented businesses and there are many firms under the Dhaka commissionerate
"We are working hard to make this work online. This process is being delayed a bit since VAT returns submissions through online are not mandatory for export-oriented businesses and there are many firms under the Dhaka commissionerate."
He, however, expressed the hope that 80% of the registered business institutions will be brought under the automated VAT system within the current financial year.
Businesspeople support automation
Businesspeople also see the NBR's automation initiative and two commissionerates' success in a positive light.
Shafiul Islam Mohiuddin, former president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), said, "Businessmen want to pay taxes. But they are afraid of harassment.
"Harassment will stop if the system is automated. People will be able to engage in business with ease. The government's revenue collection will also increase."
To automate the VAT system, the government enacted the VAT and Supplementary Duty Act in 2012 and took up the VAT Online project the following year.
The project was primarily scheduled to be implemented by December 2018 at a cost of Tk551 crore.
Later, the allocation was increased to Tk690 crore and the project completion deadline was extended to December 2020.
Under this project, online registration, online returns submission, e-payment and installation of EFD machines in business institutions are said to be undertaken.