Covid creates storm for NBR

COVID-19 has taken a toll on the country's revenue collection since April of this year, with most months recording negative growth.
Since the economic activities were sluggish, VAT collection slumped, so were income tax and customs duty.
The revenue collection growth picked up slightly in August and September when economy was reopened, but now the second wave of COVID has struck the country.
The first COVID case was detected in March, prompting the government to enforce lockdown across the country.
During the pandemic, the National Board of Revenue (NBR) was forced to suspend many of its activities, including tax-fairs, field-level surveys to find out new taxpayers and inspection of factories.
Taxmen's drive to find out tax evaders faced setbacks owing to two months' shutdowns.
Still, the board's online tax return filing system remained inactive, forcing taxpayers to crowd tax offices at the last moment to file returns.

Considering the situation, the NBR was forced to extend the deadline for submission of tax returns until December 31as many taxpayers failed to submit their returns in time.
In the budget for the current fiscal year, the NBR made submission of tax returns mandatory for all having Taxpayers Identification Number (TIN), regardless of whether they have taxable income of Tk 3,00,000 or not.
Nearly 5.0 million people have TINs, but some 2.2 million taxpayers submitted their tax returns last year.
Given the scenario, the government offered amnesty provided black money holders pay a flat rate of 10 per cent tax, which will allow them not to disclose sources of income.
But it drew lukewarm response and until November 29, only about 3200 people whitened their black money by paying Tk 3.81 billion in taxes.
To raise VAT collection, the board took its aim at non-resident companies like Google, Facebook, Youtube, etc.
The last quarter of a fiscal year, April-June, is the pick time of revenue collection every year, when the pandemic was at its height.
In the last FY, the NBR faced Tk 820 billion shortfall against its target with a 2.26 per cent negative growth in revenue collection over the previous year, the first in a decade.
In the first five months of the current fiscal, the NBR managed to collect Tk 854.04 billion which is 26 per cent of its aggregate target for entire year of Tk 3.30 trillion.
To achieve the target, the NBR will have to collect Tk 2.44 trillion tax revenue or 74 per cent of the total target in the next seven months.
Talking to the FE, field-level tax officials said achieving the target seems impossible in view of the existing economic scenario during the pandemic.
Corporate tax collection has plunged with the deteriorating financial health of large taxpayers.
Until October, the large taxpayers unit (LTU) under the income tax wing faced Tk 8.19 billion shortfall with a poor 3.16 per cent growth over the corresponding period of the last year.
To check fake audit report of corporate taxpayers, the NBR joined hand with the Institute of Chartered Accountants of Bangladesh to use Document Verification System (DVS).
Talking to the FE, a field-level commissioner said tax collection from tourism, hotel restaurants declined significantly.
Travel tax collection also declined due to restrictions imposed by many of the countries, he added.
Of the three wings of NBR, the VAT arm performed poorly with a negative growth of 5.21 per cent until November.
The average revenue collection growth was 10.20 per cent in the last five years. This means the NBR will have to collect a total of Tk 3.30 trillion in the current fiscal to reach that target.
Executive director of the Center for Policy Dialogue (CPD) Dr Fahmida Khatun said the tax collection growth faced a bump with the sluggish trend in business and investment.
To offset the shortage in "impractical" target, she argued, the NBR will have to focus on gearing up monitoring, thwarting tax avoidance and developing capacity.
She suggested the taxmen assess expenditures of people and dig into the sources of earning to find out tax evaders while making sure people are harassed.
Former finance adviser Dr Mirza Azizul Islam said revenue collection is dependent on the pace of economic activities that were hit hard by the pandemic.
The country's GDP growth would be slower as projected by both the government and development partners, he said.
Dr Islam suggested making tax collection procedure easier, reducing the scope for personal contact with taxmen and raising number of tax return filers.
"The NBR has all records of taxpayers in their TINs. It can chase the tax evaders with the help of this," he added.
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