NBR orders probing VAT-evading firms

National tax collector has ordered the field-level VAT offices to investigate businesses that avoided the payment of consumption levy and submission of returns, despite being operational during the lockdown.

The value added tax wing of the National Board of Revenue, or NBR, has asked the commissioners to find out the factories that produced and released their goods from godowns, but sidestepped the payment of VAT or submission of returns.

Jamal Hossain, member of the VAT implementation and IT of the NBR, issued the order on Wednesday to VAT offices across the country.

The order came after the discovery of such non-compliant businesses by the north VAT zone of Dhaka in a recent investigation.

Officials said the enterprises under other VAT zones may take the advantage of lockdown with misleading information of operations.

The revenue board asked the VAT offices to investigate the factories that were open, continued production and released products, but concealed information during the shutdowns that will continue until May 16.

"It is a complete violation of the VAT law. If necessary, legal action should be taken against those businesses," the order said.

Industry people appeared defensive, saying VAT would be generated if produced goods were sold but due to the closure of shops many could not sell their products.

VAT officials said some 80 per cent of the VAT-registered firms reported they have shuttered the businesses during lockdown and are unable to submit VAT returns.

As per the instruction of Zakia Sultana, VAT commissioner under the north zone, the wing officials have visited the Gazipur area to find out whether the factories are closed or not.

A senior official of the north zone said the VAT officials have visited seven factories that have not submitted any treasury or returns in the last two months.

Of the factories, they have found five plants, including renowned glass sheet and aluminium profile producers are continuing their production, the official said.

The VAT officials have secured a written statement from them to ensure the submission of VAT returns on a regular basis in future, the official added.

The VAT collection in March and April fell drastically. The north zone collected Tk 450 million in VAT in the month of February, which dropped to Tk 190 million in March and Tk 70 million in April.

However, the VAT official said they would not take any harsh measure during the lockdown considering sluggish economic activities.

Pharmaceuticals, mobile phone operators, food producers, transportation services of goods, tobacco, and super shops remained open during the shutdowns since March 26, 2020.

Earlier, the VAT wing had issued another order to the field-offices to keep close eyes on shopping malls and restaurants after opening from May 10, 2020.

VAT officials said the government needs to mobilise internal revenue too in this pandemic, which contracted 2.73 per cent in March.

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