LTU to be reformed with companies paying Tk10cr VAT

FT ONLINE

The National Board of Revenue has been planning to reform the Large Taxpayers Unit by including only the companies that pay more than Tk10 crore value-added tax (VAT) per year. 

The revenue authority has also been planning to remove companies that pay less than the amount from the unit and bring them under the local tax offices. 

The revenue board officials said they took the step to provide easy and smooth services to large corporations. They sent an order to the field offices to collect information on such companies.

Sources at the revenue board said a unit of large taxpayers was formed in 2004 to ease the process of collecting VAT from large companies. Initially, 171 companies that paid Tk5 crore VAT were included in the unit.

Many of those companies have since lost their ability to pay Tk5 crore VAT but the list has not been updated, Abdul Mannan Shikder, a member of the NBR's VAT policy, said.

On the other hand, currently, there are more than 400 companies that can pay more than Tk5 crore VAT. So, the amount of VAT required for getting labelled as a big taxpayer has been changed from Tk5 crore to Tk10 crore. 

Abdul Mannan Shikder said, "The NBR took the initiative to include new companies in the list in response to businessmen's demand." 

According to the NBR, currently, 23 percent of the total revenue and 52 percent of VAT collected in the country come from the Large Taxpayers Unit. If all the large taxpaying companies are included in the unit, this amount will exceed 80 percent. 

An LTU official said, "All the companies in the LTU have to operate following the rules. If big companies are included in the LTU, then the tax collection process will be more transparent and collection of corporate taxes will increase too."

Businessmen also think that registering big companies in the LTU will reduce scopes of evading taxes.

Safiul Islam Mahiuddin, former president of the Federation of Bangladesh Chambers of Commerce and Industries, said "Large taxpaying companies included in the unit will need not go through the complicated processes at customs houses and ports. Besides, the NBR will not need to audit them repeatedly."