Planned online Value Added Tax (VAT) payment system is set to see the light of day as the government is going to receive US$60-million loan, halted for more than one year, from the World Bank.
Economics Relations Division (ERD) officials said Friday the Bangladesh government would sign a credit deal with the global lender tomorrow (Sunday) for funding the project aimed at simplifying the tax-payment process.
The World Bank (WB) delayed disbursement of the $60-million loan, assured more than a year back, for the National Board of Revenue (NBR) to make its VAT system automated by the year 2018, officials said.
"We are going to sign deal with the World Bank for getting the $60 million loan Sunday. It will speed up execution of the online VAT-payment project," additional secretary of the ERD Kazi Shofiqul Azam told the FE.
"Soon after signing the loan deal, the WB assistance will be effective and the NBR can utilise the money for making Bangladesh's largest tax-income source, VAT, simpler to the taxpayers," he added.
More than one year ago, the NBR undertook a US$73 million project to make major changes to the VAT-payment system through making it fully online by 2018 for attracting taxpayers and checking evasion.
The World Bank had come forward with its $60 million financing pledge for VAT improvement. The rest of the amount will be paid by the government from its own exchequer.
The project works faced setback due to delay from the government side regarding reforms in some areas of the country's financial sectors, like finalisation of the VAT law, and some complexities in the tender process on the project for the online payment system.
Now the obstacles are removed and the pledged loan from the WB is going to be disbursed after signing the deal Sunday, said an NBR official.
"We have a plan to introduce sophisticated online VAT-payment system where the clients will get all the facilities online. Any client can pay its VAT online completing the process from registration to payment," said the official.
He hopes the scheme will reduce hassles facing the taxpayers as well as ensure transparency in the payment system. It will also boost the total VAT collection of the country.
VAT is the largest contributor to the country's total revenue income. Most of the VAT comes from the big companies and corporate houses as their share in the total tax income is nearly 50 percent. The remaining part of the revenue comes from other sources, including small payers.
NBR data show that the board saw huge shortages in earning revenue due to poor proceeds from income tax and VAT in the last fiscal 2013-14. The data showed that the NBR earned revenue of Tk 437.26 billion from VAT against the target of Tk 468.50 billion in the last fiscal.
The tax-payment system is very complicated which discourages the eligible payers from paying taxes correctly to the exchequer.
In many cases, tax payers do not pay their aggregate VAT to the NBR by way of bribing the tax officials. The online payment system will cut such corrupt practice and fraud, experts said.
"Since VAT is the largest contributor to the overall tax income, its payment system should be smoother and hassle-free to attract the payers to pay their taxes," said Mr Azam, additional secretary of the ERD.
The NBR ended the fiscal year 2013-2014 with a shortfall in revenue earning as it earned Tk1.21 trillion against the target of Tk 1.25 trillion.
It happened to be a second consecutive year of its failure to bag desired receipts from internal sources.
In the FY 2012-13, the NBR collected total Tk 1.08 trillion in taxes against the target of Tk 1.12 trillion.
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WB to release stalled loan for setting up the system
FHM Humayan Kabir | Published: December 06, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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