NBR moves to procure 10,000 electronic devices to check VAT evasion

The National Board of Revenue (NBR) has started the process to procure modern technology-based electronic fiscal devices (EFDs), aiming to check VAT evasion both at the retail and wholesale levels. Sources at the NBR said it has already placed a work order to procure 10,000 EFDs spending Tk 317 crore to install those at 24 types of businesses, including hotels, restaurants, fast-food shops, confectionaries, jewellers, beauty parlors, furniture shops, RMG or boutique shops, department stores, general or super shops, wholesalers and large retail stores.
The revenue collecting authority will gradually procure around one lakh EFDs.

An NBR senior official said the government announced to start the operation of EFDs in the beginning of the current fiscal year and it placed the work order as part of that. He said SZZT Electronics Company Limited, a Chinese company, will deliver the devices and the NBR will supply those to different business entities after their delivery.

The NBR official hoped that it would be possible to deliver the EFDs to the business entities within the next one month. The EFD will be helpful in bringing transparency in VAT payment plugging the loopholes to evade taxes, he said. The government earlier made the EFD use mandatory in 24 types of business entities in city corporation areas and district towns to check VAT evasion. The NBR has already issued an order in this regard.

The new EFDs will replace the electronic cash register (ECR) and the point of sale (POS). According to the order, installation of EFDs is mandatory at the outlets where the annual turnover exceeds the VAT free ceiling, which means Tk 50 lakh a year. The NBR is saying that the EFD is the upgraded version of the ECR, which is used by business houses.

If any business entity does not use the device or any deviation in using it is proved then the entity will have to pay Tk 20,000-50,000 in fine. If such an offence is committed repeatedly then the NBR will lock the Business Identification Number (BIN). The EFDs will be connected online with a server at the NBR. Any entry from a particular business entity will be registered at the NBR server.

This will help bring transparency, and remove the scope to evade tax, giving a boost to revenue collection, the NBR official said. He also mentioned that customers would be able to know if the VAT they paid goes to the national exchequer as they will receive a code that would be generated by the NBR's central server.

The NBR had made the e-cash mandatory in 2008 for 11 types of businesses -- hotels, restaurants, confectionaries, jewelers, beauty salons, wholesalers and large retail stores. But the initiative did not achieve the desired success. Besides, many businesses do not use the e-cash register even after its installation in their efforts to evade VAT allegedly in connivance with field officials of the revenue authority.

The move to install EFDs comes following advice from then Finance Minister AMA Muhith to introduce an EFD management system to combat non-payment of VAT at the retail and wholesale levels. Several thousand shops now use electronic cash registers and point-of-sale machines. However, not all use the device to issue sales invoices to customers in a bid to evade VAT and hide actual transaction figures from taxmen.

The revenue collection target for the NBR for the running fiscal year has been fixed at Tk 3,25,600 crore. Of the grand amount, Tk 1,13,912 crore will come from income, profit and capital taxes, while Tk 1,23,067 crore will be contributed by VAT. And supplementary tax will provide 48,153 crore while Tk 36,498 crore will come from import duty, Tk 54 from export duty, Tk 2,239 crore from the excise duty and Tk 1,677 crore as other taxes.