Economic Reporter :
National Board of Revenue (NBR) is going to introduce Financial Device Management system (FDMS) for preventing evasion of Value Added Tax (VAT) collection properly from 2018, officials said.
The new system for managing VAT collection could directly monitor the volume of buying and selling around the country through online. It will ensure proper VAT collection. But to do so, businesses and outlets have to change the existing Electronic Cash Register (ECR) machines.
Currently, in Bulgaria, Georgia and China and other different countries are receiving a good result for collecting VAT effectively. NBR, in Bangladesh through implementing the FDMS, plans to collect VAT effectively and efficiently. It will ensure clarity of businesses transactions and VAT collection will increase 15 to 20 per cent more than the existing system.
A NBR high official told the New Nation that introduction of such financial device is still at a state of proposal. The existing ECR in use in the markets have to be withdrawn first because such financial system could not be used in the existing ECR and amendment of ECR related notice of 2008 would be required. Introduction of financial management system proposal has been submitted to the ministry for approval. After final approval, it will be published as Public Notice and then will be effective for implementation.
According to NBR sources, ECR machines will be replaced by FDMS soon. Not only ECR the new FDMS will help NBR to adopt any contemporary accounting management and NBR will be able to monitor the state of the machines, activities and results of transactions in the country.
It needs Tk 30 to 40 crore to introduce the FDMS instead of current VAT collecting system. The FDMS will directly transfer transaction history of buyers and sellers transactions directly to NBR. FDMS enables monitoring of transactions centrally and thus it will unveil transactions clarity to NBR and make collection of VAT faster, reliable. NBR will introduce mobile SIMs with the new FDMS and it will report directly to NBR database after every transaction in the shops, outlets and organizations.
It is mandatory in the country to use ECR machines for VAT collection but there is widely allegation that due to absence of automated monitoring system, VAT evasion is going on and NBR is losing revenue from VAT. Businesses are collecting VAT from consumers but not submitting to the NBR appropriately. From this view point NBR is going to introduce FDMS through amendment of ECR 2008 notice and NBR will issue general notice on the matter soon.
According to the ECR notice 2008, From January 1, 2009 eleven businesses and services must have to use ECR, which includes Hotel, Restaurant, Sweetmeat, Furniture outlet, Beauty parlor, Community center, Exclusive Shopping malls in metropolitan areas, Departmental store, General store, other small and medium businesses (wholesale and Retail), Gold Smith and Gold sellers. The use of ECR was extended also beyond the metropolitan areas to the whole country on such businesses.
According to the Bangladesh Shop Owners Samity information, there are about 25 lakh outlets around the country. Among that, 30 per cent of the shops are fit for ECR use that is 7.50 lakh in number. But most of them do not use ECR and activ ECR users also do not provide VAT using the machine in the country.
According to NBR, there are at least Ten lakh outlets and organizations can implement ECR. Only 8000 outlets of the country are using ECR and most of the do not provide VAT using ECR. In 2009, Government took decision for providing 50000 ECR machines to different organizations at real cost but due to protest of the business owners, NBR changed decision for not implementing VAT law 2012.
NBR insiders said use of ECR was made mandatory but there was no monitoring on VAT collection and ensuring clarity of the system. To overcome the loopholes of the system there is no alternative of automated monitoring and automation now. As part of the automation NBR have proposed for introduction of FDMS in the ministry. NBR will implement the strategy right after the approval of the proposal to confirm clear VAT collection system in the country.
National Board of Revenue (NBR) is going to introduce Financial Device Management system (FDMS) for preventing evasion of Value Added Tax (VAT) collection properly from 2018, officials said.
The new system for managing VAT collection could directly monitor the volume of buying and selling around the country through online. It will ensure proper VAT collection. But to do so, businesses and outlets have to change the existing Electronic Cash Register (ECR) machines.
Currently, in Bulgaria, Georgia and China and other different countries are receiving a good result for collecting VAT effectively. NBR, in Bangladesh through implementing the FDMS, plans to collect VAT effectively and efficiently. It will ensure clarity of businesses transactions and VAT collection will increase 15 to 20 per cent more than the existing system.
A NBR high official told the New Nation that introduction of such financial device is still at a state of proposal. The existing ECR in use in the markets have to be withdrawn first because such financial system could not be used in the existing ECR and amendment of ECR related notice of 2008 would be required. Introduction of financial management system proposal has been submitted to the ministry for approval. After final approval, it will be published as Public Notice and then will be effective for implementation.
According to NBR sources, ECR machines will be replaced by FDMS soon. Not only ECR the new FDMS will help NBR to adopt any contemporary accounting management and NBR will be able to monitor the state of the machines, activities and results of transactions in the country.
It needs Tk 30 to 40 crore to introduce the FDMS instead of current VAT collecting system. The FDMS will directly transfer transaction history of buyers and sellers transactions directly to NBR. FDMS enables monitoring of transactions centrally and thus it will unveil transactions clarity to NBR and make collection of VAT faster, reliable. NBR will introduce mobile SIMs with the new FDMS and it will report directly to NBR database after every transaction in the shops, outlets and organizations.
It is mandatory in the country to use ECR machines for VAT collection but there is widely allegation that due to absence of automated monitoring system, VAT evasion is going on and NBR is losing revenue from VAT. Businesses are collecting VAT from consumers but not submitting to the NBR appropriately. From this view point NBR is going to introduce FDMS through amendment of ECR 2008 notice and NBR will issue general notice on the matter soon.
According to the ECR notice 2008, From January 1, 2009 eleven businesses and services must have to use ECR, which includes Hotel, Restaurant, Sweetmeat, Furniture outlet, Beauty parlor, Community center, Exclusive Shopping malls in metropolitan areas, Departmental store, General store, other small and medium businesses (wholesale and Retail), Gold Smith and Gold sellers. The use of ECR was extended also beyond the metropolitan areas to the whole country on such businesses.
According to the Bangladesh Shop Owners Samity information, there are about 25 lakh outlets around the country. Among that, 30 per cent of the shops are fit for ECR use that is 7.50 lakh in number. But most of them do not use ECR and activ ECR users also do not provide VAT using the machine in the country.
According to NBR, there are at least Ten lakh outlets and organizations can implement ECR. Only 8000 outlets of the country are using ECR and most of the do not provide VAT using ECR. In 2009, Government took decision for providing 50000 ECR machines to different organizations at real cost but due to protest of the business owners, NBR changed decision for not implementing VAT law 2012.
NBR insiders said use of ECR was made mandatory but there was no monitoring on VAT collection and ensuring clarity of the system. To overcome the loopholes of the system there is no alternative of automated monitoring and automation now. As part of the automation NBR have proposed for introduction of FDMS in the ministry. NBR will implement the strategy right after the approval of the proposal to confirm clear VAT collection system in the country.
