89 percent of VAT-registered firms filed no return, and 80 percent of July's collection came from just 337 firms

Most firms registered for VAT in Bangladesh are not filing regular returns. A recent review by the VAT Audit, Intelligence and Investigation Directorate under the National Board of Revenue (NBR) has revealed the picture.

According to the VAT intelligence report, of 830,232 firms registered in the country last July, 741,745 paid no VAT or did not submit a return. That means 89.34 percent of all registered firms stayed away from paying the tax that month.

By contrast, only 10.66 percent, or 88,487 firms, filed returns showing tax payments, the report said.

A review of the data shows that 68.46 percent of all firms, or 568,374 firms, submitted no return at all.

Of the 261,858 firms that did submit returns, 173,371 were zero-return filers.

The report also showed a sharp imbalance in collection. A little over Tk 3,266 crore in VAT was collected nationwide in July. About 80.67 percent of it, or Tk 2,635 crore, came from just 337 top firms.

The remaining 829,895 firms together paid only about Tk 631 crore in VAT, the report noted.

Neglect in filing was also seen in the Large Taxpayer Unit (LTU-VAT). Of the country's top 111 firms under the unit, 24 did not file a return in July.

In the Dhaka South VAT Commissionerate, which has the most taxpayers, only 24 percent, or 35,805 firms, filed returns. In the Dhaka West Commissionerate, about 70 percent of filers submitted zero returns.

In the tourist town of Cox's Bazar, 64 percent of more than 12,000 registered firms filed zero returns, leaving total collection at just over Tk 7 crore. In the Rajshahi, Rangpur and Jashore commissionerates too, about 68 to 73 percent of filing firms showed no VAT.

In the first three months of the current fiscal year (July-September), the overall revenue deficit stood at Tk 41,879 crore, with the largest shortfall in VAT. The VAT target for the period was Tk 49,405 crore, against which only Tk 29,348 crore was collected, leaving a VAT deficit of Tk 20,057 crore.

Although a facility to file returns every three months was introduced at the start of the fiscal year in response to business demands, the monthly return system was restored from last September after a major stagnation in VAT collection.