Top 10 corporate entities’ contributions fall 1.25pc

Collection of value-added tax (VAT) from the top 10 corporate taxpayers declined by Tk 4.0 billion or 1.25 per cent in the first half (H1) of the current fiscal year (FY 2024-25) from the same period of last FY.

Latest data from the Large Taxpayers Unit (LTU) of the National Board of Revenue (NBR) suggests sectors such as cigarettes, cement, gas, hotels, pharmaceuticals, and soap had less contributions to the tax collected during the period.

Economist Dr. M.A. Razzaque, Chairman of the Research and Policy Integration for Development (RAPID), attributed the decline to the political unrest in July and August and the ongoing economic slowdown.

"Notably, VAT collection from cigarettes has fallen.  However, attributing this decline solely to reduced consumption may be overly simplistic," he stated.

Despite Bangladesh's overall revenue collection remaining low, Dr. Razzaque noted, given the challenging political and economic conditions, the LTU's VAT performance has not been as severe as initially feared.

"However, if the economic conditions do not improve in the coming months, the negative growth in VAT collection could worsen, placing significant pressure on the exchequer and complicating fiscal deficit management," he told the FE.

On a more positive note, VAT contributions from 17 large commercial banks, along with the beverage, insurance, and mobile phone sectors, have shown an upward trend. Mobile phone companies, in particular, paid Tk 4.91 billion more in VAT during the July-December period of this FY compared to the same period last FY.

The LTU collected VAT of Tk 315.78 billion in the H1, down from Tk 319.80 billion in the corresponding period last FY.

The collection from three major cigarette companies fell to Tk 144.48 billion from Tk 152.19 billion. Commercial banks under the LTU-VAT paid Tk 24.91 billion, a slight increase from Tk 24.43 billion of the same period last FY.

Eighteen pharmaceutical companies contributed Tk 21.32 billion in H1, down from Tk 21.45 billion last FY's H1. Soap manufacturers paid Tk 2.69 billion, a decline from Tk 3.05 billion.

Five luxury hotels contributed Tk 500 million in VAT, compared to Tk 672 million in the same period of last FY. Six large insurance companies paid Tk 1.35 billion, up from Tk 1.29 billion last FY. Five state-owned gas companies paid Tk 35.22 billion, slightly lower than the Tk 35.79 billion collected in the same period of last FY.

A senior VAT official noted that a decline in LTU's VAT collection generally impacts the overall revenue performance, which has been on a negative growth trajectory this fiscal year.

As of December 2024, total revenue collection from the NBR's three wings was down by 1.0% compared to the same period last FY.

"We are trying to reduce tax expenditures to improve the country's tax -GDP ratio as recommended by the International Monetary Fund (IMF). However, withdrawing fiscal incentives amid the current economic downturn remains a challenge," the official stated.

Despite the setbacks, LTU's VAT collection has shown signs of positive growth in January. Authorities were hopeful of achieving the targets for the current FY.

In FY 2023-24, large businesses paid nearly 26% more VAT, marking a record increase since the establishment of LTU.

In FY 2023-24, LTU collected Tk 736.60 billion in revenue, including surcharges, from its 109 units-exceeding the target by Tk 39.86 billion.

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