The move by the National Board of Revenue (NBR) to install electronic cash registers (ECRs) at shops and service providers from the first day of the next calendar year (2009) to help check value added tax (VAT) evasion is facing resistance from businesses.
The NBR has now decided to sit with the business associations and shop owners to ease the procedure for mandatory installation of the ECRs.
The board will select shops and business establishments for installation of ECR after discussion with the business bodies in view of 'confusions' among a section of businessmen, a senior revenue board official said.
On April 17 last, the NBR issued an order making installation of ECR mandatory by July 1 for 10 service sectors.
Later on July 2, the government issued another order extending the dedaline to January 1, 2009 for all city corporations and to July 1, 2009 for all district towns following requests from business bodies.
The service providers which will have to get ECR installed are --hotels, restaurants and fast food shops, sweetmeat shops, furniture sales centres, beauty parlours, community centres, posh shopping centres in metropolitan area and relevant business organisation, departmental stores, general stores and other big and medium (wholesale and retail) business organisation.
Sources said there is a serious mismatch between the number of various service providers and VAT collected from them every year. For instance, the amount of VAT collected from hotels was only Tk.520 million in 2006-07 and in case of restaurants its was Tk 270 million. Clinics, hospitals and pathological and diagnostic laboratories have mushroomed across the country. But the total amount of VAT collected from those service providers was only Tk. 170 million in 2006-07.
One of the reasons for poor VAT collection from these service providers is thought to be involvement of a section of unscrupulous tax officials.
Some big and medium shops are now using POS (point of sale) system through computer to keep sales data instead of ECR. Those shops might be allowed to use the computerized system incorporating some options as per recommendations of the board, the NBR official said.
"We will go phase by phase to implement the order on mandatory installation of ECR," said NBR chairman Muhammad Abdul Mazid.
The board will definitely consider financial conditions of shops but it will be firm on implementing the rules, he said.
"We will not impose any system, which seems unrealistic on the businesses," the NBR chief said.
Country's apex chamber body Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president Annisul Huq said: "We have made the proposal for introduction of ECR to make the shops tax complaint."
He said the time extension was needed for helping the shop owners prepare themselves for ECR installation."
By the extended dedaline, businesses will be able to procure ECR for their shops and sales centre, he said.
Amir Hossain Khan, president of Dokan Malik Samity, said: "The government should focus more on posh areas first to implement the decision. Once the concept is familiarized, gradually all shops will be encouraged to install the machine."
The ECR is yet to be widely available in the local market. Only 2/3 companies are now marketing the machine, he said.
"Government should adopt 'go slow' policy to get cooperation of all business houses and shop owners at the district level," he said.
The NBR is likely to face strong opposition from businessmen on the issue of mandatory installation of ECR in medium and wholesale shops.
Business leaders and shop owners urged the government to keep the use of ECR optional for a certain period instead of making its installation mandatory from the start.
Officials said the government has made installation of ECR mandatory to bring transparency in the sales documents. VAT collection from service sector is not satisfactory due to absence of proper data maintaining procedures. There will be no scope for evasion of VAT after installation of the electronic devices in the services sectors, they said.
Recorded documents will bring transparency in the sales procedures, which will also help the owners of business organisations to get actual sales figure, they added.
