MANY businesses are suffering from cash flow problem as a large sum of their capital remains blocked as the process of getting refund of the Advance Tax (AT) they paid at the import stage is exceedingly difficult. The refund claims made to the National Board of Revenue (NBR) reached as much as Tk 22.35 billion against 687 applications of the companies until November 30, 2020.
Large steel sector players said they are facing difficulties in operating business smoothly as their capital got stuck without the refund. The BSRM, one of the largest steel makers of the country, said the income tax and VAT departments will need to return Tk 4.19 billion while another Tk 2.69 billion is outstanding against actual refunds accepted by the tax department.
All refund claims cause capital liabilities, escalating business operations cost, time and harassment. Small and medium scale businesses find it difficult to understand the law and are even unable to claim the refund. This results in higher prices and loss of consumer welfare as consumers are bearing the brunt of high prices of commodities for such provisions in the law.
While VAT officials claim the complexities over the issuance of refund to the industries having low tax rate compared to refund claims would be resolved in the next fiscal year the delays in implementing such processes are ultimately costing the competitiveness of our industries.
This has effects beyond simply inflating prices. They make our products less competitive in the international market, thus not enabling our firms to earn to their full potential and thus reducing our potential forex earnings. And it’s not as if the money is being spent properly in most cases — on the contrary, the public funds are being wasted in many sectors like the power sector which is gobbling up subsidies like never before.
The present government has made it abundantly clear that this government is for those party followers and others needed for maintaining itself in power. So what is good is power groupie is a good consideration. They have not been voted by the people so the people are not being counted. The logic is simple.
