Govt plans to make VAT registration mandatory for selected services

The National Board of Revenue (NBR) is preparing to make VAT registration, or a Business Identification Number (BIN), mandatory for businesses to access selected services, in a move aimed at widening the VAT net.

NBR Chairman Abdur Rahman Khan announced the plan today (9 December) at a press conference, organised ahead of National VAT Day which is to be observed tomorrow.

Responding to questions from journalists, Abdur Rahman said, "Just as people without a TIN or without filing tax returns are denied certain services, we will introduce similar measures for VAT in a gradual manner, so that businesses are compelled to obtain VAT registration."

"This will be incorporated into the law next year," he said, adding, "We intended to start this in the last budget, but unfortunately could not do so."

At present, proof of submission of tax returns – known as Proof of Submission of Return (PSR) – is mandatory to receive 43 types of services. This has led to a steady rise in both Taxpayer Identification Number (TIN) holders and return submissions over the past few years.

According to the latest NBR figures, more than 1.2 crore people now hold TINs in Bangladesh, while around 45 lakh tax returns have been submitted.

The NBR chairman said the authority has set a target to bring more than 30 lakh businesses under VAT registration within the next two years. Currently, only about 644,000 VAT payers are registered in the country, which he said is not in line with the actual number of businesses operating.

The NBR also aims to bring an additional 100,000 businesses under VAT registration within December.

"The biggest problem is that the VAT net – those who pay VAT, especially businesses through whom VAT is collected – is still very small," Abdur Rahman said, adding, "the number does not match in any way with the various national surveys and the actual number of businesses operating in Bangladesh."

Import tax on mobile phones

Responding to questions about whether taxes on imported mobile phones would be reduced, the NBR chairman said national interest would come first.

"State interest is above all. Of course, this is the state's decision," he said.

"If the government feels it is necessary in the public interest, it can give this [facility to reduce import tax] for a short period – until the next parliament sits. The next parliament will decide what to do," he added.

He said, "If we think it is necessary for the greater interest of the country and our state policymakers ask us to take a decision on this, we are positive."

National VAT Day will be observed across the country today. As in previous years, the NBR will also observe VAT Week from 10 to 15 December, with a focus on encouraging VAT registration.

The theme for this year is: "Register on time, pay VAT correctly."