Value Added Tax (VAT) collection from large companies posted a sluggish growth in the first half of the current fiscal year, primarily because of volatile political situation.
The Large Taxpayers Unit (LTU) under VAT wing of the National Board of Revenue (NBR) could collect VAT worth Tk 107.49 billion against the target of Tk 131.33 billion set for the July-December period.
VAT collection from large companies, however, registered a 14.7 per cent growth over the amount collected during the same period of last fiscal. The collection of VAT saw a continuous declining trend throughout the first half of the current fiscal.
Impact of political unrest in the first half had hit the VAT collection of January last also. LTU collected Tk 22.04 billion as VAT in the last month (January) as against the target of Tk 29.76 billion.
VAT collection from cell phone companies marked a 24 per cent negative growth in the July-December period. Tax collection from luxury hotels also dropped by 3.0 per cent over that of the corresponding period of last fiscal.
Apart from cigarette sector, other major VAT collection sources including gas, construction, banks, beverage and pharmaceutical were also lower due to political unrest during the period under review.
Mobile phone companies, the second largest source of VAT revenue, paid Tk 18.35 billion in VAT against the target of Tk 30 billion in the first half of the current FY. The LTU received Tk 24.12 billion VAT in the corresponding period of last fiscal.
A senior official of the VAT wing has blamed political uncertainty and cut in SIM (subscribers' identification module) tax responsible for the shortfall in VAT collection.
"Revenue collection from sales of SIM is likely to decline by Tk 10 billion this year as the government halved the tax in the budget," he said.
The LTU collected Tk 3.36 billion from some 17 commercial banks under its supervision against the target for Tk 4.01 billion.
However, the LTU achieved 6.65 per cent growth in VAT revenue from the banks which paid Tk 3.15 billion in the corresponding period of the last fiscal.
According to the existing VAT law, bank clients have to pay 15 per cent VAT on obtaining any types of services from the banks.
"We expected 20 per cent growth in revenue from banks due to rise in deposits significantly during the first half of the fiscal '14," the official said. Â
Substantial fall in occupancy rates of the luxury hotels including Pan Pacific Sonargaon, Ruposhi Bangla, Radisson and Westin hit the VAT collection target from these entities.
The LTU collected Tk 400 million VAT from posh hotels against its target of Tk 442 million.
"The business of posh hotels was affected severely because of the cancellation of planned trips of many foreign guests. Many of the bookings by local and international conferences were cancelled during that period," the VAT official said.
Gas sector is the third large source of VAT collection. Because of poor gas supply situation, the volume of VAT revenue posted a shortfall of Tk.6.0 billion against the target.
VAT collection from pharmaceutical sector also missed its target by Tk 490 million.
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