Government's revenue authority has moved to scrutinise production data of pharmaceuticals under an effort to crosscheck actual outputs with value-ddedef tax (VAT) returns submitted by the companies and strengthen revenue compliance.
The Large Taxpayers Unit (LTU) under the VAT wing of the National Board of Revenue (NBR) has written to the Directorate General of Drug Administration (DGDA) for furnishing detailed production information of pharmaceutical products to verify whether VAT declarations are consistent with actual manufacturing output.
Under the drive, meant for a larger end of enhancing government revenues to finance what is dubbed an ambitious national budget, the LTU has sought last five years' item-wise production data of 17 leading pharmaceutical companies.
According to VAT officials, pharmaceuticals manufacturers are required under existing regulations to submit periodic production reports to the drug regulator.
The revenue authority now wants to use those records to compare production volumes with VAT returns filed by the companies to find possible discrepancies.
The LTU Commissioner, Syed Atiqur Rahman, confirmed that the request was made as part of the authority's regular compliance- monitoring activities.
"We have sought the information from the DGDA as part of our responsibility to monitor VAT payment. Government agencies are expected to cooperate by providing information required under the law," he told The Financial Express.
The LTU has requested production reports submitted by the companies from fiscal year 2021-22 onwards under Section 82 of the Value Added Tax and Supplementary Duty Act 2012.
The exercise follows a high-level meeting where the Prime Minister's Adviser for the Ministry of Finance and Planning directed the authorities concerned to ensure compliance with the legal requirement for pharmaceutical manufacturers to submit production reports to the DGDA.
However, VAT officials said they were uncertain whether the DGDA maintains the information in a readily accessible database despite the regulatory requirement as it has not received any response after sending the letter on May 12 last.
Some officials have noted with concern that either the production reports are not being submitted regularly by all companies or the DGDA has not preserved the information in a format that can be readily shared with other government agencies.
They noted that effective implementation of the legal provisions governing production reporting is essential for ensuring transparency in the pharmaceutical sector and strengthening VAT compliance.
Asked about the issue, DGDA Director Dr Md Akter Hossain said the authority would examine the relevant legal provisions before responding to the LTU request.
"We need to review the rules to determine whether the DGDA is required to preserve such production data or collect them in the manner sought by the VAT authority," he said.
Industry representatives, however, questioned the necessity of seeking the same information from multiple agencies.
Bangladesh Association of Pharmaceutical Industries (BAPI) Secretary-General Mohammad Halimuzzaman says pharmaceutical companies generally submit production information to the DGDA annually rather than quarterly, as preparing quarterly reports is administratively burdensome for many manufacturers.
"The government is talking about improving the ease of doing business yet companies are often required to submit the same information repeatedly to different government agencies," he said.
He argues that the VAT authority already possesses extensive information on pharmaceuticals manufacturers through their Business Identification Number (BIN), VAT returns, the imports of raw materials and other regulatory filings.
"There is little scope for maintaining separate production -reporting systems for both the VAT authority and the DGDA, particularly when pharmaceutical companies already comply with stringent regulatory requirements," he adds.
In contrast, Incepta Pharmaceuticals Director (Corporate Affairs) Naimul Huda, executive director, finance and accounts, has said his company regularly submits production information to the DGDA as part of its compliance obligations.
"We regularly provide production data to the DGDA because it is one of the compliance requirements for obtaining approval to import pharmaceutical raw materials," he added.
In the letter, the LTU has requested item-wise production reports of 17 leading pharmaceutical companies, including Square Pharmaceuticals PLC, Beximco Pharmaceuticals PLC, Incepta Pharmaceuticals Ltd, Renata PLC, Eskayef Pharmaceuticals Ltd, Aristopharma Ltd, Advanced Chemical Industries (ACI) Ltd, ACME Laboratories Ltd, Essential Drugs Company Ltd, Drug International Ltd, General Pharmaceuticals Ltd, Navana Pharmaceuticals PLC, Nuvista Pharma PLC, Orion Pharma Ltd, Pacific Pharmaceuticals Ltd, Synovia Pharma PLC and IBN SINA Pharmaceutical Industry PLC.
Revenue officials said synchronising production data maintained by the DGDA with VAT records would enable the NBR to detect discrepancies between reported production and VAT declarations, improve transparency and strengthen revenue mobilisation from the country's rapidly growing pharmaceutical industry.
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