Sharp rise in VAT appeal surety
Doulot Akter Mala | Wednesday, 8 June 2016
Aggrieved businesses or individuals will be required to pay 50 per cent of the assessed amount in advance while filing cases with the tribunal and appellate tribunals dealing with VAT related disputes.
In the Finance Bill 2016, the government has substantially hiked the amount of deposits to 50 per cent from the previous 10 per cent to discourage businesses coming up with challenges against assessment made by VAT officials.
The fiscal measure has been incorporated into the VAT law 1991 as per decision of the national economic coordination council and verbal instructions from Prime Minister Sheikh Hasina, the National Board of Revenue (NBR) said in an instruction that has been prepared for the VAT commissioners.
"Any aggrieved individual or firm will have to deposit 50 per cent of the assessed tax at the time of filing cases against tax/vat assessment," said a senior VAT official.
If an aggrieved businessman or individual wins the case, they will get refund of the paid money, the official said.
However, businesses and former tax officials strongly criticised the new measure and demanded its withdrawal.
Talking to the FE Tuesday, adviser to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Manzur Ahmed said it is unjust to realise 50 per cent of the disputed tax from the businesses at the time of filing cases.
"The law should be framed in a revenue-neutral manner. Such a higher rate is found nowhere in the world," he said.
Many of the tax demands of the VAT officials are inflated so businesses cannot afford to pay 50 per cent of that demand, he claimed.
"Tax demand of the VAT officials will be met with the 50 per cent payment of advance tax," he said.
The new rule will cause harassment to the businesses at the time of seeking justice, he added.
On allegation of taxmen against businesses for unnecessary delay in resolving cases, he said it cannot be done only by businesses, taxmen are also involved in the process.
Former VAT member Abdul Mannan Patwary also suggested a review of the tax measure.
"Many of the VAT-payers will avoid filing cases in the tribunal and appellate tribunal due to the measure. They will go directly to the normal courts," he said.
The NBR can introduce a system under which 25 per cent of the amount may be collected in cash while another 25 per cent as bank guarantee at the time of filing cases, he added.
Earlier, the government's Fiscal Coordination Council instructed the NBR to initiate a move to amend the existing laws for realising full taxes from aggrieved taxpayers before they file appeals against NBR assessments.
Currently, an income taxpayer needs to deposit 10 per cent of the disputed tax before making appeal to the NBR appeal commissioner.
An appellant has to pay another 10 per cent to the government exchequer for filing appeal with the Appellate Tribunal of the revenue board against decision of the appeal commissioner.
For filing a reference case with the High Court, an income taxpayer needs to pay 25 per cent of the difference between the tax as determined on the basis of Appellate Tribunal and the tax payable under the income-tax returns.
On customs wing, an importer or exporter needs to deposit 50 per cent of the demanded tax or penalty amount for getting access to the appeal commissioner and tribunal of the NBR.
Before 2004, taxpayers needed to pay full amount of demanded customs duty or penalty for getting access to the legal process.
There is no need to pay any amount for filing appeal with the tribunal and reference case with the High Court against decision of the customs and VAT appeal commissioner and tribunal.
The official said a growing trend in filing cases by businesses blocked a substantial amount of VAT money under a logjam. Some 28 per cent of the original aggregate revenue from VAT was found stuck up with the pending court cases.
The VAT wing of the revenue board has some Tk 179.38 billion worth of revenue receipts stalled out of its original target for 639.02 billion for the outgoing fiscal 2015-16.