VAT online project awaits yet another extension

The government may extend the much-talked-about VAT Online Project (VOP) by another six months to June 30, 2021, as some of its key components are unlikely to be implemented with the December 31 deadline.
The World Bank (WB) has already given the green signal to the National Board of Revenue (NBR) on the extension of the Tk 6.90-billion project.
Some key components like refund, audit, debt and risk management to automate VAT administration have not been completed until now.
The Bank is providing $60 million for the project under a 'programme for result' initiative.
A senior VOP official said the project expenditure is expected to be Tk 3.40 billion after its extension by another six months.
Until November 2020, the total spending was Tk 2.56 billion, he told the FE.
The official further said that they would be able to develop 14 out of the total 16 modules by next month.
The remainder will be done by the next six months, he added.
The Vietnamese company FPT is developing the VAT online system. The contract signed with the firm will expire on December 31, 2020.
According to officials, the service contract with the company is likely to be extended further.
However, there is an allegation about the company's competence in developing the IVAS system.
The FPT was awarded the contract following persuasion by influential quarters, the officials claimed.
The National Board of Revenue (NBR) has already stopped providing service charges to the company.
The VOP has paid Tk 1.09 billion to the FPT for developing the system and purchasing hardware to automate VAT administration.
Officials said the NBR might not make the full payment to the tune of Tk 2.38 billion to the firm.
They said the board has asked the FPT to hire technical experts from Vietnam to finish the remaining task.
A field official said automation of VAT administration is necessary for successful execution of the VAT and Supplementary Duty Act-2012.
Both businesses and VAT wing cannot reap the benefits of the new law, made effective on July 01, 2019, for lack of automation of the wing, he cited.
Some provisions of the law require digitisation of VAT (value-added tax) system, the official mentioned.
Meanwhile, the NBR amended many provisions of the law through issuing a statutory regulatory orders to make it 'business-friendly'.
However, officials said frequent changes in the law have been impeding the implementation of the project.
Project officials said technical aspects of the IVAS system were changed several times to align it with the amended law.
The new VAT law was aimed at introducing a uniform rate of VAT and the IVAS system was developed keeping the provision of 15-per cent VAT at all stages.
Later, the government introduced multiple VAT rates like the VAT Law-1991 following a demand from businesses.
The VOP has to incorporate the changes into the system keeping the provision of multiple rates of VAT.
It developed only four modules until November 11.
Officials said VOP work was geared up in recent times as the project director himself is developing the business process of the modules instead of appointing a project management consultant.
Currently, VAT registration or issuance of business identification number (BIN), submission of VAT returns and electronic VAT payment have come under automation.
The NBR launched the project on May 09, 2014, with the fund support from the WB and the government.

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