Investigations should be opened against a section of officials and consultants of the National Board of Revenue (NBR), said the president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), Sheikh Fazle Fahim.
He alleged a section of NBR officials and consultants could not ensure a concerted and automated tax system. However, they have taken money from the government, FBCCI president said.
Sheikh Fazle Fahim expressed extreme discontent over the newly launched Value Add Tax (VAT) Act. Tax net has not been widened by reducing the rate of tax, he alleged, adding now new complications are emerging for business.
VAT law expert and executive director of Policy Research Institute (PRI), Ahsan H Mansur, blamed all parties for this.
About the statements of FBCCI, he said a section of field-level officials of NBR and a section of businessmen are responsible for the current state of the VAT Act.
The VAT Act formulated in 2012 was amended on the consensus of FBCCI in consultation with prime minister’s adviser Mashiur Rahman. But the business community went against the law ahead of its implementation in 2017. That was a big mistake.
FBCCI organised a press conference to place a proposal for the amendment of the budget for the fiscal year 2020-21.
Its president Fazle Fahim made a proposal to withdraw public money from some banks.
He brought out allegations against some bank directors and said they are creating confusion instead of assisting in the implementation of the incentive package.
Fahim proposed that public deposits be withdrawn from the banks which do not assist in the implementation of the package. This money should be kept in the helpful banks, he added.
In the written speech, Sheikh Fazle Fahid did not mention NBR specifically. Rather he mentioned, ‘a section of government officials and consultants’.
The FBCCI president raised some objections against the VAT Act regarding the budget. These include limited scope of VAT exemption, empowering field level NBR officials to seize records and documents of businesses.
Sheikh Fazle Fahim said there are more sections which will make the procedure complex. These will hinder transparency and promote corruption.
All parties should be blamed for this. A section of field-level officials of NBR and a section of businessmen are responsible for the current state of VAT Act. The VAT Act formulated in 2012 was amended on the consensus of FBCCI in consultation with prime minister’s adviser Mashiur Rahman. But the business community went against the law ahead of its implementation in 2017. That was a big mistake.Ahsan H Mansur
This goes against the policy of automated VAT system, for which Bangladesh has invested money for implementation.
Sheikh Fahim mainly pointed finger at the Revenue Mobilisation Programme for Results: VAT Improvement Programme (VAT Online Project).
This project funded by World Bank was launched at a cost of Tk 6.90 billion in 2013 and supposed to end in December 2020.
Under the project, Electric Fiscal Device (EFD) is supposed to be installed, but it is not done yet.
When asked about the matter, project director Mustafizur Rahman said, “I have not heard FBCCI president’s statement. Consultants have taken money for work. If the work is not done, how was the automated VAT system introduced? It is not the responsibility of the project to widen tax net."
He said some 35 per cent of the project money has been spent.
A French firm was selected for the appointment of consultants. They were efficient. The decision was changed for political reasons and a Vietnamese firm was appointed. Everyone knew they came to make money. The firm took officials to different countries on pleasure trips.A H Mansur
NBR and businessmen are in a conflict over the VAT Act from the past. In a consultative meeting of budget on 30 April 2017, there was a war of words between the then finance minister Abul Maal Abdul Muhith, NBR chairman Nojibur Rahman and businesses.
Nojibur Rahman had said at the meeting, “I know to make burning hot iron turn cold.” In response, the then FBCCI president and now MP Shafiul Islam said, “Power does not last forever.”
The VAT law was not made effective that year. Prime minister Sheikh Hasina postponed VAT Act for two years, which was implemented through various amendments in 2019.
Sheikh Fahim said that two years were taken to make the law revenue and business friendly. During this period, the officials did not work a And many of them still have their job. And it is learnt that the failed consultants are likely to join to implement the same project.
He said, “Ninety nine per cent of the people should not suffer for one per cent of the people.”
In the question-answer session, Fahim also said NBR can engage new people to go ahead.
The VAT net can be expanded and the rate can be fixed at seven per cent, he suggested, adding VAT collection will be increased threefold.
He remarked many are interested in launching new projects instead of implementing the existing one.
‘They came to make money’
Ahsan H Mansu said a good proposal was given for the administrative reforms of VAT in NBR. But that could not be implemented due to objections from the field level officials of NBR.
Creating zones for VAT collection is the main reason of harassment, where commissioners determine everything. This system exists nowhere in the world. Nobody has supreme authority in other countries.
Ahsan H Mansur said a French firm was selected for the appointment of consultants. There were efficient.
The decision was changed for political reasons and a Vietnamese firm was appointed. Everyone knew they came to make money. The firm took officials to different countries on pleasure trips.
Sheikh Fazle Fahim said a section of people is creating confusion over the incentive package. There is a provision to punish those people and organisations that create hindrance in assisting people.
The FBCCI president said the banks, which will assist, should be given a concession of one per cent corporate tax.
The discussion raised the issue of disbursement of loans from the incentive package for cottage, very small and SME sectors. Banks said it was a risk to provide loans to the small entrepreneurs. This also involves expenditure. FBCCI at the press conference disclosed that a total of Tk 500 million to 60 million has been given from Tk 200 billion fund.
About the matter Association of Bankers Bangladesh (ABB) president Ali Reza Ifthekhar said the main problem is that the small loan seekers do not apply properly. This makes the process slower, he added. There will be much more progress in the future, Ali Reza added.
Abolition of advance tax demanded
Sheikh Fahim termed the budget humanitarian and said this was a budget to turn around socially and economically. In the proposed amendment of the budget, FBCCI demanded abolition of advance tax in next three years.
*This report, originally published in Prothom Alo print edition, has been written in English by Rabiul Islam.