10,000 more EFDs to boost VAT collection

The National Board of Revenue (NBR) is going to install electronic fiscal devices (EFDs) at 10,000 more business establishments in Dhaka and Chattogram as part of its move to streamline collection of value added tax (VAT).

The installation of EFDs will help raise VAT collection as the special devices will be directly connected to the central server of the NBR and the VAT will be deducted as soon as the buyers make payment against their purchases.

“We are going to install 10,000 EFDs next year and we hope to set up more EFDs in phases to streamline VAT collection system,” said a NBR official.

The NBR sources said currently only 3 percent of total VAT comes from domestic trade at retail and wholesale levels. The use of EFD will increase VAT collection to 10-15 percent.

So far, EFDs have been installed in 3,096 institutions. When the EFD machine is installed, the VAT money of the VAT payers goes straight to the government treasury.

NBR member Abdul Mannan Shikder said steps have already been taken to speed up the installation of EFD in Dhaka and Chattogram to streamline VAT collection online as it will prevent dodging of VAT by dishonest businesses.

"We're hopeful that VAT collection would go up significantly if we're able to bring all business establishments under EFD network in phases," said Abdul Mannan Shikder.         

Electronic fiscal devices are widely used in many countries to check evading of VAT. An EFD is able to maintain account of business establishments and calculate VAT automatically. As part of VAT and Supplementary Duties ACT 2012, the NBR made the use of the device mandatory for 24 types of businesses, including hotels, restaurants, clothing stores and super shops.

"The use of EFDs will bring about a revolutionary change in VAT collection," said NBR Chairman Abu Hena Md Rahmatul Muneem at a recent meeting.

The automation would increase the overall VAT collection, which is the largest source of revenue income. In 2019-20 fiscal year, the NBR collected a total Tk 218408.94 crore revenue in which VAT contributed Tk 1,09,846 crore. 

In the current fiscal  2020-21 the NBR has targeted to collect a total of Tk 3, 30,000 crore revenue of which the VAT wing has been tasked to collect Tk 1, 25, 162 crore.

Meanwhile, the NBR has started holding the draw of the lottery of EFDMS from February 5.

The draw is held based on the printed invoices coupon issued by the sellers.

The revenue authority has introduced this EFDMS ((Electronic Fiscal Device Management System) to popularize VAT system and ensure transparency in VAT collection. 

It has decided to hold the lottery draw every month on printed invoices issued from EFDMS to motivate people in paying VAT through using these EFD machines.

Based on the printed  invoices from the first day to last day of every month, the lottery will be held subsequently on the 5th day of the following month.

The NBR also requested the consumers to preserve the invoices or lucky coupons carefully issued from the EFD/SDC machine (Sales Data Controller)

On December 6, 2020, the NBR announced 100 prizes to encourage buyers to ask sellers for receipts against purchases.

The first highest prize is Tk 100,000, second highest prize is Tk 50,000 and the NBR will give one prize for this category. The money for the third prize will be Tk 25,000 and the NBR will issue five prizes for this category.

The prize money for the remaining 94 prizes will be Tk 10,000 each.