Large firms give NBR the cold shoulder

Most of the large VAT payers have shown little interest in the National Board of Revenue’s (NBR) directive to share their accounting software IDs and passwords with the latter or use its prescribed software.

The NBR issued the order on June 30, 2019, making it mandatory for businesses registering annual transactions of over Tk 5 crore to either use the NBR-approved VAT software or the one tested by the revenue board.

The directive was aimed at ensuring transparency in revenue collection and curb tax evasion.

However, most large multinational companies (MNCs) are yet to start using such software because they use central accounting applications that cover their operations across the globe. Besides, they do not feel safe sharing their IDs and passwords.

The NBR says only 169 companies across the country have complied with its directive. Not all of them are under the Large Taxpayers Unit (LTU)-VAT wing.

But there are 110 companies under this wing that are required to use the NBR-approved VAT software. These companies pay more than Tk 50,000 crore in VAT, which is almost half the total collection from this sector. However, only six of them are using the NBR-mandated software.

Those that have not shared access to their systems with the NBR or started using the board’s mandated software include British American Tobacco Bangladesh, Grameenphone, Robi, Banglalink, Islami Bank, Square Pharmaceuticals, Petrobangla, Sonali Bank, and Bangladesh Power Development Board.

In another directive on the matter issued on August 3 last year, the LTU-VAT wing warned the companies, saying it will take punitive measures if they do not share their IDs and passwords within a week.

In this regard, the NBR also issued a warning, saying it will take punitive action, including locking the business identification number (BIN), if the companies do not start using the mandated software or share their IDs and passwords within December 31.

Most of the companies as well as NBR commissionerates then urged the revenue board to extend the deadline, but the latter is yet to do that. It has not taken any action against the companies that did not comply either.

However, companies are in fear of facing legal action. The Business Post tried to talk to businessmen about this, but none agreed to comment.

Foreign Investors’ Chamber of Commerce & Industry President Naser Ezaz Bijoy said they had urged the LTU-VAT wing to give them an alternative option through which they can upload the necessary information in the revenue board’s system.

“If companies share their IDs and passwords, their confidential information could be leaked. They may also face cyber security threats,” said Naser, also the chief executive officer of Standard Chartered Bank, Bangladesh.

“Besides, we have to take consent from our customers before sharing credentials because their information is also integrated into the system.

The law does not permit sharing consumers’ confidential information,” he said.

“If we have to proceed, the law has to be amended and we have to get approval from the company board as well,” he added.

Dhaka Chamber of Commerce and Industry President Md Sameer Sattar told The Business Post companies have a legitimate concern about sharing the IDs and passwords of their accounting software because there are chances that their confidential information might be leaked or the system could be hacked.

“This will hamper businesses. So, the NBR has to find other solutions to encourage businessmen to comply with its directive,” he said.

He said the revenue board may accept the certified copy of the latest statement generated by the company’s accounting software that will include the required information. “The copy could be certified by the chief financial officer, director, or managing director of the company.”

Terming the NBR directive unrealistic, former lead economist at the World Bank’s Dhaka office Zahid Hussain questioned whether any NBR official would be willing to share his ID and password with anyone. He said this directive would affect foreign investment in the country.

He also said this is a matter of privacy.

No businessman will feel safe sharing the password with the tax authorities because confidential information about the business and consumers may get leaked mistakenly, he said.

“I never heard of any such directives anywhere in the world,” said Zahid, adding the NBR should rather focus on collaborating with audit firms and their associations to ensure the integrity of internal and external audits.

“It should also take steps to create a good atmosphere and encourage companies to pay the required VAT,” the economist added. The NBR-approved VAT software calculates the general consumption tax of an enterprise based on the sales of its goods and services.

The software is used to record entries related to sales, purchases, inventory, production, and payments in order to generate government-prescribed reports. It also helps companies submit the final VAT return to the government system directly.

NBR officials said the revenue board will not withdraw its directive but may extend the deadline to help companies comply. The directive will help curb VAT irregularities and evasion in the coming days, they added.