An International Monetary Fund (IMF) mission is set to assess progress in compliance with the conditions tagged to a $4.7-billion loan package for Bangladesh, pending release of the next tranche.
Officials say a programme-review mission of the IMF is scheduled to meet with the country's revenue authority Thursday for the review.
The mission, which is scheduled to visit Bangladesh on October 4-19, will look into improvements in revenue-related affairs dealt by three wings of the National Board of Revenue (NBR), they said.
Another mission, focused on tax-expenditure analysis, is scheduled to arrive on November 23 to meet with tax officials.
The mission will assess the performance in FY23 and the outlook for FY24 for the income tax, customs and VAT wings, according to sources. It will also evaluate the reorganisation of the income tax wing and the status of the compliance risk management unit for direct taxation.
The Washington-based multilateral lending agency has long been recommending that the tax authority separate its tax policy and implementation wings.
The mission will also review the compliance improvement plan for income tax, assessing the need for technical assistance and capacity building.
The mission will also focus on value-added tax (VAT) related measures for raising the tax-GDP ratio in FY24 by 0.5 percentage points (end-June 2023 structural benchmark).
As per IMF conditions, the three wings of NBR are supposed to show improvements in the compliance risk management unit by the end of December 2023.
Progress on the installation of electronic fiscal devices, reforms of VAT administration and the IT wing will also be evaluated by the IMF mission.
A paper prepared for the IMF-NBR meeting by the VAT wing has compiled data on the progress of revenue collection and other initiatives in line with the conditions.
According to the paper, VAT collection in FY 2022-23 was Tk 1.21 trillion, missing the IMF's target to mobilise revenue worth Tk 1.25 trillion. For FY 2023-24, the target for VAT collection has been set at Tk 1.43 trillion.
The VAT wing has furnished data on the partial withdrawal of VAT exemptions by NBR, including mobile phones, polypropylene staple fibre, ballpoint pens, software and LPG cylinders.
NBR witnessed an 86 per cent growth in online VAT return submissions. It has also installed some 9572 electronic fiscal device management systems/sales data controllers (SDC).
It has also signed a contract with a private company-Genex Infosys-which has installed 773 machines in Dhaka and Chattogram.
In the current fiscal year, the NBR has increased taxes and prices on tobacco items, cigarettes, non-smoking tobacco, plastic products, aluminium items and sunglasses.
The VAT wing has found that Compliance Risk Management Units (CRMU) are not required, as the VAT (Audit and Intelligence) directorate has been conducting risk-based audits.
The NBR has made A-chalan or e-payment mandatory for entities. For the VAT and customs wing, taxpayers who would pay a net tax above Tk 5.0 million.
In the meeting with the mission, the taxmen have planned to convey their plan to launch e-invoice and demonstrate significant progress on the activation of modules of an integrated Vat administration system (IVAS).
They will also share tax gap analysis, VAT audit techniques (including risk management), financial report analysis, return analysis, digital forensic analysis for detecting tax evasion, withholding tax management and project and procurement management.
According to provisional data, in the July-August period, the NBR faced a shortfall of more than Tk 40 billion in tax revenue collection.
The NBR has collected Tk 462 billion in tax against its target of Tk 503.21 billion.
The government has set a target of Tk 4.30 trillion for the NBR in the current fiscal year.
Of the three wings, the customs wing has surpassed its target, collecting Tk 161.92 billion. However, both the income tax and VAT wings have fallen behind their targets, with the income tax wing collecting Tk 121 billion and the VAT collection being Tk 179 billion.
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