Nearly 89.34% of VAT-registered businesses in Bangladesh either failed to submit VAT returns or reported zero VAT in July this year, highlighting significant weaknesses in the country’s VAT compliance system.
According to a review by the VAT Audit, Intelligence and Investigation Directorate of the National Board of Revenue (NBR), out of 830,232 VAT-registered businesses, 568,374 did not submit returns during the month. Another 173,371 submitted returns showing zero VAT. Only 88,487 businesses reported VAT payments in their returns.
The review found that the country collected more than Tk 3,266 crore in VAT in July. Of this amount, Tk 2,635 crore came from just 337 businesses, representing only 0.13% of all registered entities. These businesses contributed around 80.67% of the total VAT collected.
The remaining 829,895 businesses collectively contributed approximately Tk 631 crore.
A senior official of the VAT Intelligence Directorate said submitting zero returns does not necessarily indicate VAT evasion, as businesses with no taxable transactions or suspended operations are permitted to file zero returns. However, operating businesses that fail to submit returns or conceal actual transactions by reporting zero VAT are committing irregularities.
The report also identified non-compliance among businesses under the Large Taxpayer Unit (LTU). Of the 111 registered entities under the unit, 24 did not submit returns in July, despite the unit collecting more than Tk 1,428 crore in VAT during the month.
In the Dhaka South VAT Commissionerate, only 35,805 of 146,435 registered businesses submitted returns. Meanwhile, nearly 70% of return-submitting businesses under the Dhaka West Commissionerate reported zero VAT.
In Cox’s Bazar, more than Tk 7 crore in VAT was collected from 12,335 registered businesses in July. However, no single business paid more than Tk 1 crore in VAT.
The situation comes amid a substantial revenue shortfall for the NBR. During the first three months of the current fiscal year, the revenue deficit reached Tk 41,879 crore, including a VAT shortfall of Tk 20,057 crore.
Against a VAT collection target of Tk 49,405 crore for July-September, the NBR collected only Tk 29,348 crore.
The VAT Intelligence Directorate has recommended verifying the actual business activities of registered entities, identifying inactive businesses and auditing transactions of high-risk taxpayers.
Director General of the VAT Audit, Intelligence and Investigation Directorate Muhammad Zakir Hossain has reportedly sent a letter to the NBR chairman seeking necessary action in this regard.
