Revenue collection marks rise in first nine months

An increased amount of VAT realised from three major corporate sectors has contributed to upward revenue collection growth in the first nine months of the current year.
Cement, gas, banks, pharmaceuticals and cigarette companies have paid higher amount of value added tax (VAT) in July-March period compared to that of the corresponding period, according to available data of the Large Taxpayers Unit (LTU) under VAT wing.
VAT collection from cigarette companies have increased by 29.75 per cent while from cement 14 per cent and pharmaceuticals 17.6 per cent.
Officials said upward collection of VAT from large taxpayers and downward revision of target has helped the LTU surpass its tax collection target for the first three quarters.
 LTU under VAT Department has collected Tk 172.09 billion against its target for Tk 171.95 billion.
The wing will have to collect Tk 79 billion VAT in the next three months or in the last quarter of the current fiscal year (FY) to achieve its revised target for Tk 251.09 billion.
VAT collection from service charges of the banking sector surpassed its target for first nine months and also marked a substantial rise.
Some 17 major commercial banks under LTU contributed Tk 9.47 billion against Tk 8.79 billion last year. 
LTU officials said there were some loopholes on VAT collection from the banking sector including collection of VAT from house rents, excise duties, which has been rectified.
The officials said prices and sales of drugs saw a substantial rise this year reflecting higher payment of VAT.
Some 25 major pharmaceutical companies are under the LTU that paid Tk 7.51 billion in July-March period against Tk 6.38 billion in the corresponding period.
VAT collection from sales of cement has also marked an increase in the first nine months thanks to the physical infrastructure construction for transportation sector, including roads and flyovers.
Cement sector has paid Tk 1.60 billion VAT against Tk 1.40 billion in the corresponding period.
Revenue collection from state-owned gas companies has witnessed 9.41 per cent increase to Tk 22.43 billion against Tk 20.50 billion last year. VAT collection from cigarettes has increased to Tk 80.49 billion against Tk 62.03 billion last year.
Cigarette, hazardous to public health, contributes the highest amount of revenue as VAT to the public exchequer.
Bangladesh as a signatory to Framework Convention on Tobacco Control (FCTC) will have to raise taxes on cigarettes to 70 per cent which are now ranging from 36 to 61 per cent.
Experts said tax collection from cigarettes could be increased manifold by increasing the taxes to that level and scrapping current provision of price slab.
However, VAT collection from mobile phone companies has dropped by Tk 11.20 billion in July-March period compared to that of the corresponding period.
LTU officials said cut in SIM tax, reduction of duty on 3G and drop on sale of new SIMs has affected the VAT collection from the second largest sector.
They said VAT collection growth was showing a gradual fall in each of the previous nine months, from 46 per cent to 10 per cent.
The officials, however, expressed the hope about regaining the growth to achieve the target for the current year as the wing has intensified its effort to plug loopholes of revenue leakage.