NBR seeks 24/7 access to large VAT payers' accounting software

The National Board of Revenue (NBR) has asked for round-the-clock access to the accounting software of companies and government entities paying large amounts of value-added tax (VAT) – in a bid to bring transparency in revenue collection.  

To this end, the Large Taxpayers Unit – known as LTU-VAT of the NBR – sought the read-only user IDs and passwords of the accounting software from 111 entities which together account for more than Tk50,000 crore of VAT – almost half the total collection from this sector.

In a directive on 3 August, the revenue authorities have also warned the organisations of action if they do not provide the information within a week.

Sources at the NBR said that this initiative has been taken as part of preventing irregularities in the accounts of the entities and ensuring transparency.

The move caught the representatives of large companies off guard. They feel that by providing passwords of all their business account information, the privacy of the organisations cannot be protected and there are chances of the accounts being hacked.

The Metropolitan Chamber of Commerce and Industry (MCCI), one of the country's most influential trade organisations, sent a letter to the LTU-VAT office on 11 August, terming such an order "immature" and stating that it may send a negative message to foreign investors.

"Because of this, foreign investment may be affected," read the letter.

MCCI President Md Saiful Alam told The Business Standard, "If necessary, they can ask for specific information but there is no reason to ask for IDs and passwords."

"Who will take responsibility if the business secrets of the companies are undermined? It will give a negative message about us in the international arena," he added.

Mostafa Azad Chowdhury Babu, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said that having such access can lead to the hacking of confidential information of the organisations.

"If the VAT authorities think it necessary, they can seek information or take access to the information. But we don't know if there is anywhere else in the world to have access to the companies' user ID and password all the time by any authorities," he added.

"We cannot open all our secret information. Treating those who account for more than half of the VAT in such a manner can have a negative impact on the economy," the business leader told TBS.

Former NBR chairman Muhammad Abdul Mazid told TBS, "Maybe they sought it because there is a legal basis. But it should be made clear."

At the same time, he believes that any action should be taken after taking taxpayers in trust.

In a 2019 order, the revenue board made the use of software with specifications prescribed by the NBR mandatory for companies with an annual turnover of more than Tk5 crore.

According to sources, most of the companies have not given information regarding software usage to NBR. Banks said they cannot give their core software to NBR. Seventeen banks pay VAT in this office. There are 111 establishments under the LTU-VAT office which account for more than half of the total collected VAT.

A senior NBR official told TBS on condition of anonymity that some businesses maintain multiple accounts. Through this, they tend to evade VAT by showing low sales information.

According to sources, after checking the accounts of three such cement companies, this office has recently found evidence of VAT evasion by giving false information. Preparations have also been made to file criminal charges against the businesses for allegedly concealing information.

The order of the LTU-VAT office said that if the information about the use of any software other than the requirement of NBR is revealed later, it will be considered an attempt to evade tax and disciplinary action will be taken later.

The Business Standard spoke to top officials of at least four VAT-paying companies, all of whom said the move may expose their business secrets. They raised the question: who will take responsibility in such cases. However, none of them agreed to reveal their names.

A top official at one of the country's leading mobile phone operators told TBS that their software is from a German multinational company known as SAP.

"It contains not only VAT accounts, but also other business information, which is strategically kept secret. But if it is opened, what is the guarantee that it will not leak?" he posed a question.

He said the NBR has no law stating that all types of secrets of a company should be open at all times.

The official said the 2019 order also did not mention anything about providing the user ID and password of the account. Asking to open all information like this is contradictory to existing laws.

This correspondent tried to talk to LTU-VAT Commissioner Wahida Rahman Chowdhury but she did not answer the phone.

However, another senior official of LTU-VAT told TBS that it was sought as per rules.

"And the access we will have is read-only. If the companies do not trust the government (VAT office), then whom will they trust?

In fiscal 2021-22, NBR collected more than Tk1.08 lakh crore of VAT, of which about Tk53,000 crore came from the LTU-VAT office.