LTU beats tax target as tobacco, telecom drive revenue in FY24

Large businesses paid nearly 26 per cent more Value Added Tax (VAT) in the last fiscal year, marking a record increase since the creation of the Large Taxpayers Unit (LTU).
The LTU, established in 2003, collected Tk 736.60 billion in revenue, including surcharges, from its 109 units in the 2023-24 fiscal year, exceeding its target by Tk 39.86 billion, according to the latest LTU data.
A senior official of the large taxpayers unit said a chunk of the growth came from Tk 50 billion in outstanding VAT recovered from Petrobangla, combined with intensified efforts by LTU officials to check tax evasion.
Some 17 large commercial banks paid 17.13 per cent more tax, or Tk36.56 billion in VAT, in the last fiscal year.
Consumers of the top three cigarette companies paid 16.04 per cent more, or Tk 355.15 billion, in revenue. Tobacco tax accounted for 48.21 per cent of the LTU's total revenue last year, according to official LTU data.
Mobile phone users paid 15.74 per cent more VAT, or Tk 109.08 billion, making it the second-highest revenue sector for the LTU.
The VAT official said the number of smokers had not increased at the same rate as the unit's revenue, crediting a revised VAT policy for the growth.
The VAT officer said adding a Singer Bangladesh unit to the zone, after relocating it from other areas, has improved revenue from electrical goods.
He said growth in bank clients and new services offered by commercial banks also helped the VAT authority collect more tax.
Besides, an upward revision of excise duty on high-income bank depositors contributed to the higher VAT collection from the banking sector, he added.
Revenue collection from beverages, cement, coconut oil, hotel, oxygen, soap, ceramic tiles and water supply declined compared to the previous year.
Gas consumers paid 189.26 per cent more VAT, while electrical goods consumers paid 220.53 per cent and telecom equipment consumers paid 139.56 per cent more.
Regarding the decline in VAT collection in some sectors, including cement, he said the slowdown in the Annual Development Programme (ADP) implementation was a key factor.
He said the devaluation of the local currency against the US dollar led to higher prices for telecom equipment, contributing to the nearly 140 per cent increase in VAT.
Some 18 pharmaceutical companies paid 10 per cent more VAT -- totalling Tk 41.20 billion.
Six insurance companies paid Tk 2.45 billion in VAT in the last fiscal year -- an 11.11 per cent increase compared to the previous fiscal. VAT collection from three dairy product companies under the LTU surged by 17 per cent.
VAT collection from five large hotels declined by nearly 5.0 per cent, while the cement sector fell by almost 8.0 per cent.
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said the government remained reliant on tobacco and telecom revenue while a large informal sector remained untapped.
"We do not know what the impact on VAT collection is after the installation of electronic fiscal devices (EFD) in retail shops," he added.
He said all taxpayers under the LTU are using automated systems, so digitising VAT collection for the LTU and plugging loopholes for underhand dealings should be easy.

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