VAT collection set to take hit as COVID-19 ravaged businesses
Publish- May 19, 2020, 08:37 AM
Fahad Ferdous - UNB Staff Writer
Update- May 19, 2020, 10:38 AM
The collection of Value Added Tax (VAT), which contributes 37 percent to the total revenue collection, is experiencing the worst-ever scenario due to the COVID-19 impacts that halted trade and business in the country for a couple of months.
"During the 2008 global recession, we didn’t witness such a depressing situation," a senior VAT official at the National Board of Revenue (NBR) told UNB.
According to available data, the VAT collection till March was six percent higher compared to the same period of the last fiscal (2018-19). But the collection nosedived almost by 20 percent in April compared to the corresponding period of the last fiscal year.
As of April 2020, the collection of VAT was Tk 67,769. 76 crore against the revised VAT collection target of Tk 108,600 crore, the data revealed.
The VAT collection of the same period of the last fiscal was Tk 87, 175.77 crore.
"The economic activities has come to a grinding halt due to the coronavirus, casting its shadow on overall revenue collection, including VAT," the NBR official said.
He also said there is no clear indication so far how long this situation will continue. "The revenue collection scenario will worsen if this situation prolongs."
The NBR high official also apprehend that it would take several months to put the revenue collection, including VAT, back on track after the resumption of economic activities. "Everything is on hold; many small business entities are facing permanent closure. So, our tax net will obviously get shrunk."
He mentioned that the government has taken various steps, including stimulus packages, to keep the business entities afloat in the coming days.
The NBR official pointed out that as a vaccine or medicines for this COVID-19 are yet to be developed, it can be said the economic activities across the world, including Bangladesh, would suffer more in the coming days. "So, let’s hope for the best."
Meanwhile, the NBR through a letter asked its field offices to formulate a strategy keeping the present condition in mind for expediting the VAT collection to achieve the revised target of the revenue collection.
NBR member (VAT Implementation and IT) M Jamal Hossain in the letter said this situation might not be there like this or might improve. "Whatever the situation is, we’ve to move forward formulating a necessary strategy to attain the target," he asked the field offices in the letter.
In this connection, he laid emphasis on having intensive communication with big companies.
The letter mentions that officials will have to depend on the items like cigarettes, mobile, bank, bkash, internet and medicine, which pay higher revenue to the national exchequer, and pay attention to collecting advance VAT and outstanding revenue.