Market volatility drives higher import-stage revenue growth

| Update:
Mar 03, 2022 3:36:16 p.m.

Tax revenue collection, mainly revenue at the import stage, increased by 15.75% in the first seven months of the current fiscal year.

Customs revenue increased by 22.45% through January of FY 2021-22 due to market volatility for commodities and petroleum products.

A significant portion of income tax also comes from revenue at the import stage.

The tax authorities now collect higher taxes because the value of imported products, mainly those that generate income, has increased significantly.

The National Revenue Board (NBR) collected 1.53 trillion taka in taxes during the July-January period, up 208.21 billion taka from the same period last year.

Taxpayers paid 467.67 billion taka in taxes, up 14.30 percent from the corresponding period last year.

VAT collection increased by 12.68 percent to 579.42 billion taka during the period in question. The customs wing collected Tk 487.27 billion in taxes. However, three of the wings missed their respective targets for the period.

The revenue collection targets for VAT, customs and income tax were Tk 1,280 billion, Tk 960 billion and Tk 1,060 billion respectively for the July-January period.

A senior NBR official said that the government was setting a collection target with an ideal situation in mind, but the NBR had to grant several tax exemptions after the national budget.

“Tax exemptions have eaten up a significant portion of tax revenue, leading to a shortfall in the collection target,” he adds.

The government must provide such exemptions in the national interest and also to maintain commodity market stability, the official said.

The President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Md Jashim Uddin, suggests that the NBR only go out from the perspective of revenue collection given the volatility in the global market.

The value of cooking oil has increased globally and the collection of taxes on the product has also increased as a tax is imposed on the value, he said.

Experts said import spending would rise further if the ongoing war between Russia and Ukraine continues.

Bangladesh Bank data shows that the opening of letters of credit, commonly referred to as import orders, rose 11.18% to $6.86 billion in January from $6.17 billion in January. last month.

Customs revenue grew negatively by 4.46% in fiscal year 2019-2020, which jumped to 27.41% in fiscal year 2020-21.

During the 2021 financial year, the growth of VAT collection was 15.44% and income tax increased by 19.31%.

The NBR collected Tk 771.50 billion in customs revenue last year, followed by Tk 975.07 billion in VAT and Tk 852.24 billion in income tax.

In the financial year 2019-20, it collected Tk 605.52 billion in customs revenue, Tk 848.52 billion in VAT and Tk 730.13 billion in income tax.

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