Top 10 firms pay 45% of VAT

Some 45 percent of the total value-added tax (VAT) and supplementary duty collected by the National Board of Revenue (NBR) in the last fiscal year comes from only 10 companies.

These firms come from only four sectors -- telecommunication, power, petroleum and the tobacco sectors. Tobacco, although a discouraged sector by the government, leads the list.

NBR officials say that a major part of the total VAT collection came from only a few firms because a high VAT was imposed on their products, and also because of expanded businesses in the power, energy and telecommunication sectors.

In the just concluded 2018-19 fiscal year (FY), the NBR collected Tk87,610 crore in VAT and supplementary duty. NBR data shows that of the amount, the top 10 companies contributed Tk39,080 crore.

It constitutes 44.88 percent of the total VAT collection, while over 1.5 lakh other institutions that submitted VAT returns provided the remaining 55 percent.

NBR Chairman Mosharraf Hossain Bhuiyan said, “Most of the products people use on a daily basis are exempted from VAT. On the other hand, businesses of tobacco and luxury products, including telecommunication, are controlled by a handful of firms. So they provide the largest share of the total VAT collection.”

“Moreover, the VAT net under the newly enacted VAT law has been expanded too. As a result, VAT collection from other sectors will also increase in the coming days,” he added.

An analysis of the NBR data shows that British American Tobacco Bangladesh (BAT, Bangladesh), as a single entity, has topped the list of VAT payers by contributing over 22 percent of the total collection.

This multinational company has also emerged best in law compliance alongside enjoying the top-turnover status.

BAT has been acknowledged as the top VAT-paying firm in the country for the past several years because of increased VAT rates on the tobacco sector.

In FY18, the company paid Tk16,539 crore in VAT and supplementary duty.

For this reason, the company also enjoys special attention of investors in the stock market.

The price of each share of the corporation, so far, has increased 120 times more than its face value to reach Tk1205 at present.

Having a paid-up capital of Tk180 crore, it also declares more than 500 percent dividends for its investors every year.

Golam Mainuddin, chairman of BAT, Bangladesh, told The Business Standard, “BAT daily pays Tk55 crore in VAT and supplementary duty to the NBR. Apart from this, we also have to pay corporate tax, health development surcharge and development charge.”

All these have helped the company earn the top tax-paying status in the fiscal, he said.

Due to a high VAT rate of 75 percent in total on cigarette products, the list of top tax payers also includes two other firms from the same sector -- United Dhaka Tobacco Limited (Second) and Abul Khayer Tobacco Limited (Fifth).

In FY19, United Tobacco paid Tk5,848 crore in VAT, while Abul Khayer Tobacco paid Tk2,234 crore.

In the previous fiscal year too, these two firms gave Tk3,703 crore and Tk1,672 crore respectively in VAT, enabling them to climb to the third and seventh positions. 

After the tobacco companies, three private mobile phone service providers – Grameenphone, Banglalink and Robi – in the telecommunication sector have placed themselves in the list of top taxpaying firms.

In this sector, customers have to pay 27.50 percent tax in total, including 15 percent VAT, seven percent supplementary duty and two percent surcharge. Service providers give the money to the NBR after deducting it from customer accounts.

In the last fiscal year, Grameenphone made it to fourth position on the list by paying Tk2,646 crore, while Robi appeared sixth (paying Tk1,306 crore) and Banglalink eighth (paying Tk918 crore).

Apart from VAT, the service providers claim that they also have to pay other taxes, including regulator and corporate taxes.

In FY18-19, Grameenphone, Robi and Banglalink paid Tk2,401 crore, Tk1,023 crore and Tk675 crore respectively.

Among these three, Grameenphone – the lone profitmaking corporation – has captured a solid position in the stock market too.

The face value of each of its shares has increased from Tk10 to reach Tk320, with a paid-up capital of Tk1,350 crore.

Every year the company distributes more than 200 percent dividend to its investors.

Mobile phone service providers have done well in taxpaying because of high tax and compliance, according to the Association of Mobile Telecom Operators of Bangladesh (AMTOB).

Brigadier General (Retd) SM Farhad Hossain, secretary to the AMTOB, claimed, “Mobile phone operators prepare financial statements based on international standards. They also properly pay all the taxes they collect from their subscribers.”

After tobacco and cell phone service providers, the energy sector contributed the most to VAT collection.

In the last fiscal year, the state-owned oil, gas and mineral resources corporation – Petrobangla – appeared third on the list with a VAT payment of Tk4,456 crore.

The institution paid this large chunk of money in VAT and supplementary duty against its purchase of petroleum products from international oil companies last year.

Meanwhile, Titas Gas Transmission and Distribution Company under Petrobangla, and Meghna Petroleum and Bangladesh Power Development Board under Bangladesh Petroleum Corporation also bracketed themselves into the list.

These three companies paid Tk1,008 crore, Tk470 crore and Tk421 crore in VAT respectively in FY18-19.

Titas and Meghna Petroleum have also retained a sound position in the stock market. Both companies give more than 100 percent dividend every year.

Md Harun-Or Rashid, director (finance) of Petrobangla, said the government institutions do not make business by distributing gas.

Petrobangla and its subordinate companies have to pay large supplementary duties, even though their year-end turnovers are not as big as other companies, he added.