Waiver, single source key challenges: NBR

The wide range of tax exemptions and high dependency on a single sector in the case of revenue collection are the key challenges for the National Board of Revenue (NBR) to widen the tax net and increase the tax-to-GDP ratio.

“The NBR will gradually reduce tax exemption which hopefully would help increase the tax-to-GDP ratio. The current tax to GDP ratio is not satisfactory because the range of tax exemption in our country’s VAT is wider,” said NBR Member (VAT policy) Zakia Sultana while presenting the keynote at a seminar organised as part of the highest VAT (value added tax) payers’ award giving ceremony at a hotel in the capital on Saturday.

She said NBR provides exemption facilities to those sectors which will play a pivotal role in saving foreign currency and mobilising internal resources in the near future.

Sultana added that the expansion of industrialisation is essential to achieve the developing country status graduating from the least developed country.

“Currently, NBR provides VAT exemption to 489 HS-code basic and primary goods and 50 services according to the first schedule under the VAT and Supplementary Duty Act, 2012,” Sultana said, adding that the revenue board also provides VAT exemption to additional 500 goods at different levels through issuing SROs.

“The NBR has to come out from the single source dependency in case of revenue collection as the VAT wing collected around 30 per cent of its total revenue from the cigarette sector only,” she added.

Addressing the NBR’s single-source dependency, she said, “About 30% of total VAT is collected from tobacco sector. The revenue collection will be undoubtedly affected as the health ministry has drafted rules for controlling tobacco as part of the goal to make the country free of tobacco by 2040. So, the NBR has to find out the alternative potential sources for increasing revenue collection from VAT.”

Addressing as the chief guest of the seminar, Finance Minister AHM Mustafa Kamal said, “We have not been able to do what was necessary to expand the tax net. We will soon bring the sectors under VAT coverage which still are out of the tax net, through increasing the service quality, digitalisation of the VAT system, and enhancing the capability of the revenue administration.”

The minister urged the country’s businessmen to work together with the government with a helping mind for ensuring the country’s sustainability.

“Tax net expansion is a must, but it has to be ensured that the tax rate has been reduced and the VAT payers are not harassed by the revenue officials,” said FBCCI President Md Jashim Uddin.

He assured that if any company willingly evades the tax and VAT, the FBCCI will not stand beside it.

Stressing an investment and business-friendly tax system, the FBCCI chief urged NBR to prioritise the recycling and backward linkage industry.

Presiding over the seminar, NBR chairman Abu Hena Md Rahmatul Muneem said, “We are providing policy support and reducing tax rate cautiously so that the amount of revenue collection is not reduced.”

“We are not focusing on tax collection, rather we are working to ensure simplification of the system, encourage the payers to pay the tax, and minimise the difficulties through automation,” he added.

After the seminar, NBR awarded nine top companies at the national level for their outstanding contribution in paying the VAT in fiscal 2020-21.   

Another 120 companies will also get the NBR awards from the commissionerate concerned for their contribution at the district level. Every year NBR organises an award ceremony to inspire VAT-payers across the country.

Besides, NBR is going to observe the National VAT Week from December 10 to 15, across the country with the slogan “Unnoyoner VAT Niti, VAT Diye Gorbo Jati”.