The Bangladesh VAT Professional Forum (VAT Forum), an organization of professionals dealing with Value Added Tax (VAT), has demanded an IT Smart VAT framework to make the country’s VAT system more revenue- and business-friendly. The organization thinks that the development of this sector will be possible through the modernization of VAT management, not in the existing system. And this requires a smart VAT structure, where information technology will play an important role.
The organization has made 116 recommendations to create a VAT paying culture and implement a smart VAT framework by ensuring good governance among VAT receivers. These proposals have been sent to the National Board of Revenue (NBR) recently.
Some of these proposals are to amend several rules and sections of the VAT Act, 2012. Besides, the organization has proposed to integrate the highest revenue generating organizations with Ibus. Making the rate of VAT 5 per cent on the manufacture of bathroom and kitchen fittings, adjusting the tax deducted at source, including the provision of uniform price sale in the law, fixing the financial limit for central registration and issuing all notifications related to exports etc.
The organization said in its proposal that the provision on uniform price selling needs to be included in the law. The VAT Act of 1991 included such provisions. The main purpose of the Act is to collect VAT. If it is easier to collect VAT in any way, that method can be adopted. Moreover, since such provisions have been practiced before, many are accustomed to such provisions. Therefore, introducing such a provision would make it easier to collect VAT from many establishments.
Besides, the 111 establishments under the Large Tax Paying Unit (LTU) Commissionerate contribute about 55 per cent of the revenue collected locally. The 500 establishments across the country that pay the highest VAT contribute about 80 percent of the total revenue collected locally. Considering the 1,000 establishments across the country that pay the highest VAT, this small number of establishments contribute nearly 95 percent of the total revenue collected locally.
The issue of gradually integrating these institutions into the central system will be brought into law and action taken accordingly will increase VAT evasion prevention and VAT collection.