A cumulative amount of VAT collected from consumers but not deposited with the exchequer has ballooned to Tk 243.76 billion, with a government-owned corporate holding back a king's ransom.
The revenue board's effort to realise arrears in value-added tax (VAT) from the state-owned Petrobangla has not progressed in the last seven years for inaction on part of the Ministry of Finance in this regard, official sources said.
They said the National Board of Revenue (NBR) has to shoulder the burden of huge VAT arrears although the MoF itself earlier had decided to settle the backlog through book transfer in 2017.
On March 14, 2017, the MoF decided to settle the dues of Petrobangla through 'book adjustment'. The 38th Parliamentary Standing Committee meeting of the Ministry of Power, Energy and Mineral Resources also recommended taking necessary steps to pay the amount to the revenue board.
Though the VAT wing of the revenue board has outstanding revenue lying with 4,186 businesses, Petrobangla owes the lion's share of it, accounting for 99 per cent, officials said.
Of the entities, the energy corporation owes Tk 225.84 billion out of total arrears worth Tk 243.76 billion, according to latest NBR data.
The volume of the VAT arrears is almost equivalent to one month's aggregate tax-revenue collection by the National Board of Revenue that lags behind annual revenue-collection target set for funding incremental national budget.
"To realise the arrears, the VAT wing had frozen bank accounts of Petrobangla in June 2022. Later, it activated the bank accounts following assurances of clearing the dues," says one revenue official.
The amount of held-up VAT has been compiled from undisputed taxes, until August 2023, by the VAT wing of the NBR by collecting data from its 12 VAT zones across the country.
However, realisation of the overall arrears remained poor in the current fiscal year compared to that of previous FY due to financial crunch facing some businesses in the current fiscal.
In the month of August, the VAT wing realised arrears worth Tk 63.3 million which was Tk 135.5 million in the same month of the said FY.
Also, the NBR collected a total of Tk 218.6 million worth of VAT arrears last FY, until August, which now declined to Tk 106.4 million.
Officials said maximum of the arrears were lying with the state-owned entities.
Chattogram Port Authority owes a total of Tk 4.67 billion followed by Civil Aviation Authority Tk 105.5 billion.
Two oil-marketing companies, Standard Asiatic Oil Company Limited and Meghna Petroleum Limited-owe the exchequer Tk 1.06 billion and Tk 356.3 million respectively.
Some Tk 170.6 million is lying with Bangladesh Services Ltd while Pan Pacific Sonargaon has Tk 72.3 million.
Talking to the FE, a senior VAT official said most of the arrears are lying with Petrobangla that remained pending since 2016.
The LTU has held meeting with the entity regarding payment of the arrears where Petrobangla expressed its inability to clear the dues until the Ministry of Finance allocates the amount.
The arrears have accumulated on account of subsidised gas supply to the consumers, which was supposed to be reimbursed from the MoF.
However, Petrobangla is ready to pay the dues if it gets the allocation.
Earlier, then Finance Minister Abul Maal Abdul Muhith had instructed resolving the issue through book transfer showing the amount as deposited to the NBR's VAT wing.
"The decision remained shelved until now as the government has found its less significance, just to transfer money from its one pocket to another," says the official.
Revenue officials rue that NBR's tax-collection performances are often questioned by various entities while cooperation in realising accumulated arrears remained ignored.
Economists say the government needs domestic revenue at this stage "to reduce dependence on costly foreign funding and manage current-economic turmoil".
The financial jargons like 'Book Adjustments' mean, for any item of company property for a given fiscal, adjustments with respect to 'Book Value' for depreciation, cost recovery, or other amortization deduction or gain or loss computed in accordance with the Treasury Regulation's Section 1.704-1(b)(2)(iv)(g) including 'Book Depreciation'.
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