The government has scrapped turnover tax facility for manufacturing industries located in Dhaka South, North and Chittagong City Corporation area to bring them under VAT registration network.
Value added tax (VAT) officials have to issue Business Identification Number (BIN) to the manufacturing industries located in these city corporation areas on mandatory basis by July 30 as per recent instruction of the revenue board.
They have to issue the VAT registration number or BIN to annual business turnover of the manufacturing units engaged in production of taxable goods.
The instruction came after the government amended a provision in the budget for fiscal year 2016-17 of the VAT rule making BIN mandatory for manufacturing units in the two major cities.
Currently, many of the manufacturing industries are enjoying a lower rate of VAT under turnover system despite having considerable annual turnover. They do not have to obtain BIN.
Under the existing VAT law, businesses having annual business turnover up to Tk 8.0 million are entitled to enjoy 3.0 per cent turnover tax instead of paying VAT at 15 per cent. They have to obtain a turnover enlistment number instead of BIN.
A senior VAT official said manufacturing industries in Dhaka and Chittagong city corporation area must come under regular rate of VAT at 15 per cent irrespective of their business turnover as per amended rules.
The VAT wing of the NBR recently issued an instruction to its field offices to bring the manufacturing units of Dhaka south, Dhaka north and Chittagong City Corporations under VAT registration, he said. The field offices will have to report to the NBR after completion of VAT registration of all the manufacturing units of the two cities by August 7, he added.
However, the NBR does not have any data on how many manufacturing units are enjoying the lower VAT rate under turnover tax.
In the instruction, the VAT wing also directed VAT commissioners of Dhaka and Chittagong to prepare a list of businesses under turnover tax.
The VAT official said turnover tax was introduced to facilitate small businesses to grow by paying a nominal rate of VAT.
Currently, there are 840,000 registered VAT payers or BIN holders. Of them, the NBR receives VAT returns from only 32,000 VAT payers.
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