The National Board of Revenue has asked its field offices to carry out scrutiny and other legal activities on Value-Added Tax returns on a priority basis during the same tax period of returns submission to realise lawful revenue, instead of claiming outstanding VAT after five to six years.
The VAT wing of the NBR issued the instruction on Thursday to end harassment of VATpayers in the audit process and abate the risk of legal complexities.
In the instruction issued to its 12 VAT commissionerates, the NBR said that it was the routine responsibility of the field offices to realise applicable and lawful VAT during the same tax cycle of returns submission.
It may cause various types of problems both for businesses and tax offices if VAT officials do not perform the routine responsibilities properly and on time, it said.
Issuing demand notice for outstanding VAT based on five or six years old annual audit reports may cause legal complexities including harassment to businesses, it added.
Tax offices can avoid such problems through completing scrutiny and other legal processes on time.
Businesses have to file VAT returns every month, which is called a tax cycle.
VAT officials usually conduct regular examination on returns every month, scrutiny on annual audit report, examination of the books of accounts of the VATpayer and inspection of the factory premises on occasions.
They also conduct intensive audit on five-year-old VAT returns but they can also go through returns of previous years based on suspicion and specific proof of VAT evasion or other related offences.
Businesses are also to preserve documents related to VAT payments of the last five years.
NBR officials said that the VAT wing issued the directives after getting complaints from businesses, especially from the readymade garment sector.
Bangladesh Garment Manufacturers and Exporters Association has been requesting the NBR to refrain from making demands for previous years’ documents arguing that it causes extreme level of hassle for businesses.
Apparel leaders said that many of the BGMEA members were facing problems as field level VAT offices were claiming fictitious VAT based on annual audit report prepared by chartered accountancy firms five to six years back and other old documents.
They said that many of the inputs of the RMG industry were VAT-exempted while some goods and services were not. Businesses cannot preserve documents for much of the expenditures, particularly for those which are VAT-free, for so many years.
But VAT officials claim documents for expenditures on which VAT is applicable and issue demand notice in case of failure to furnish documents.
Earlier in April this year, the NBR asked its field officials not to harass businesses while conducting audit and follow rules and regulations in the audit process.