Greater VAT paying cos to come under LTU

Dhaka,  Mon,  25 September 2017
Published : 12 Jun 2017, 01:04:05 | Updated : 12 Jun 2017, 09:41:32

Greater VAT paying cos to come under LTU

Greater VAT paying cos to come under LTU
Doulot Akter Mala

All large-scale businesses, each paying Tk 100 million annually in tax on average, are set to come under close supervision of the Large Taxpayers Unit (LTU) under VAT department from next fiscal.

The National Board of Revenue (NBR) has framed fresh guidelines on selection of large taxpayers for the unit.

During the last three consecutive fiscal years (FYs), the businesses that paid on average VAT worth Tk 50 million had been under the LTU, established in 2004.

The new rules, issued on June 01 by the NBR, were framed by increasing the VAT amount twofold.

As per the guidelines, businesses which have paid on average Tk 100 million in last three financial years would come under the LTU.

The revenue board will select the necessary number of businesses to place under the LTU by considering its administrative capacity.

Currently, a total of 156 large businesses pay VAT under the LTU, contributing 56 per cent to the aggregate VAT collection.

Those businesses paid Tk 304.17 billion or around 58 per cent of the total value-added tax collected in the FY 2015-2016.

Talking to the FE Sunday, commissioner of LTU's VAT wing Motiur Rahman said the Unit started its journey with 171 companies that had paid Tk 50 million each on average annually in the last three years.

The number of business units now came down to 156 as some of the companies' VAT payments decreased for incurring losses, he added.

"Now we have some 141 VAT-registered businesses under the new online system that registered with electronic Business Identification Number (BIN)," he added.

As the new VAT law has the provision of central BIN, multiple units of business that had several BINs have obtained a single BIN, he said.

All mobile-phone companies, a large multinational cigarette company, 17 private commercial banks, and gas and oil sector are major contributor to the LTU's VAT collection.

The NBR will form a committee headed by NBR member (VAT Policy) to select the business houses for bringing those under the jurisdiction of the LTU as per the recent guidelines.

The committee will conduct scrutiny twice a year--in August and September--to include and exclude businesses for the unit on the basis of their financial statements.

Names of the businesses under the jurisdiction of LTU Vat will be published through issuing a gazette notification.

If any business houses are left out from the LTU jurisdiction, they will go back under the VAT commissionerate on the basis of geographical locations.

However, all of the existing businesses under the unit would continue to pay tax in the unit irrespective of their average VAT payments in last three years.

Officials found the previous selection criteria complex as the revenue board would have to consider the amount of annual turnover, paid tax and issues related to associate and sub-subsidiary companies of the large business houses.

There was a provision of not bringing more than 200 businesses under the LTU in the previous guidelines.

Due to this restriction, the LTU cannot spread its wings and establish regional office although income-tax LTU has already established its another unit in Chittagong.

The LTU commissioner said the unit achieved 21 per cent growth in revenue collection in the current FY 2016-17.

VAT officials at the unit work in a functional organisation structure with multiple wings, such as audit, taxpayer service, revenue accounting, collection and enforcement, instead of traditional method wherein a tax official looks after all issues of a taxpayer.

"It is the highest growth since 2004. The unit's average revenue-collection growth had been 10.4 per cent until 2015-16," he added.
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