Business recovery drives up VAT collection from large taxpayers

Seven out of top 10 sectors under the large taxpayers unit (LTU) posted a 20% growth in VAT payments in the first six months of the current fiscal year, thanks to a strong rebound of businesses from pandemic-induced losses. The sectors are cigarettes, banking, pharmaceuticals, gas, electricity, beverage and water supply.

Collection from three other top VAT-paying sectors – telecom operators, soap and cement – witnessed a negative growth.

When it comes to company-wise contribution, the overall VAT mobilisation from 110 large companies grew by 15% to around Tk25,000 crore in July-December, although 42 of them fell short of what they paid during the same period a year ago, according to the LTU-VAT of the National Board of Revenue (NBR).

But VAT generation from LTU-listed companies, which account for 50% of the total collection, failed to meet the target by around Tk1,400.

The NBR set a target to collect 1,29,000 crore in the form of VAT, while its revenue mobilisation goal was set at Tk3,30,000 crore for the current fiscal year

The gas sector topped the list of VAT payment with a whopping 168% growth, followed by the banking sector 25%, cigarettes 16%, pharmaceuticals 11%, electricity distributors 10%, water supply 3% and beverage 2%. 

On other hand, VAT collection from mobile operators amounted to Tk4,216 crore, down by 4% year-on-year, while the collection from Unilever's soap and nine cement companies fell by 13% and 10% respectively.

Wahida Rahman Chowdhury, commissioner at the LTU-VAT, told The Business Standard, "We are now trying to know the reasons why VAT collection in the telecom and cement sectors fell, and we will further enhance audits in these companies."

According to LTU-VAT sources, more than half of the VAT collected comes from the cigarette sector, followed by mobile phone operators, banks, medicine, gas and other sectors.

Grameenphone pays the highest amount of VAT among telecom operators. According to the NBR, Grameenphone's VAT payment dropped by 4% and Robi's by 3% in July-December of FY22, while collection from Banglalink rose by 4%.

An analysis of GP's financial statements shows that in the first half of the current fiscal year, the mobile operator's revenue increased, but profits decreased. 

Contacted, Md Hasan, head of External Communications at Grameenphone Ltd told TBS, "As part of our continuous efforts to resolve pending disputes with the National Board of Revenue, GP had some one-off payments for the final settlement of some issues during the first half of the fiscal 2020-21, which resulted in higher payments than in the same period of fiscal 2021-22." 

Shahed Alam, chief of Corporate and Regulatory Affairs at Robi Axiata Limited, said when the supplementary duty on mobile phones increased in the budget for FY20, a huge number of Robi SIMs were already in the market, resulting in an increase in VAT collection from Robi at that time. 

On the other hand, this year VAT payment fell on account of low SIM sales, triggered by some restrictions imposed by the NBR, and because of some adjustments of customs duties and other taxes levied at the import stage. 

He, however, said despite a fall in VAT collection from Robi, the overall collection of income tax and duties increased in the first six months of FY22.

Talking about a fall in VAT collection from Unilever, NBR sources said the company saw their sales drop in the first half of the current fiscal year. Besides, the adjustment of tax rebate is another reason for a decrease in the company's VAT payment.

However, Zahidul Islam Malita, finance director at Unilever Bangladesh Limited, told TBS, "The revenue, including VAT and supplementary duty, collected from our company has marginally increased in the first six months of the current fiscal."

Mohammed Amirul Haque, managing director of Premier Cement, told TBS that in the second half of FY21 (July-December), the cement sector's overall sales sector did not go well. That is why the VAT collection from it decreased.