An Efficient VAT Collection System for Jewelry Stores on EFD Machines
In the bustling streets of Dhaka, the implementation of the Electronic Fiscal Device (EFD) for Value Added Tax (VAT) collection has been a significant milestone. However, even after various initiatives, one-third of shops are yet to adopt this machine. With unused machines lying idle, the National Board of Revenue (NBR) is now urging jewelry stores to comply.
A recent agreement with the private company Genex Infosys aims to install 9,000 EFD machines in Dhaka and the commercial city of Chittagong by August 22, 2023. Despite promising to supply 20,000 machines within a year, Genex Infosys has only delivered 9,000, prompting a 53-paisa commission for VAT collectors as per the contract. The failure to provide the EFD machines has significantly impacted online VAT collection efforts.
According to NBR sources, there is a surplus of these machines in stock. The NBR has the capability to monitor sales, tax collection, and revenue generation even without visiting the stores directly. Despite four years since the EFD implementation, 3,000 machines have not been utilized, resulting in uncollected VAT. Jewelers are now looking to reintroduce the machines in their stores.
### Challenges of Non-Compliance: a Notice to Genex Infosys
Initially committed to supplying 20,000 EFD machines in the first year, Genex Infosys only delivered 9,000, failing to meet further demands. Consequently, other businesses have been unable to acquire the necessary machines. The lack of EFDs has forced non-compliant shop owners to sell products without VAT, bypassing the NBR’s oversight.
In response to Genex Infosys’ non-compliance, the NBR has issued a notice citing contractual violations leading to a halt in the 6,000 EFD machines’ commission payments to Genex Infosys.
### The Ineffectiveness of EFD Usage: Insights from the NBR
The NBR has expressed concerns regarding the failure of the EFD program due to non-compliance by relevant entities. Both the retailers and the NBR seem disinterested in using EFD machines effectively. While the retailers prefer selling products without VAT, customers avoid paying the tax, affecting revenue collection.
### A Glimpse into the Market Realities
A field survey across various shops in the capital revealed a reluctance among most shop owners to utilize EFD machines, even when available. Out of seven shops visited, four jewelry stores showed no interest in EFD usage. While most customers were unwilling to pay VAT, even when included in the price, government revenues continue to suffer due to uncollected taxes.
### Insights from Shop Owners Association
The Shop Owners Association President, Mr. Arifur Rahman Tipu, shared his views with Banglanews, highlighting the challenges faced by businesses due to EFD non-compliance. Despite the NBR’s inability to equip all shops with EFD machines, the disparity in machine distribution has led to varying VAT practices among retailers. Consequently, those with EFD machines tend to inflate prices, while others sell without VAT, creating an unfair market advantage.
In light of these challenges, the NBR is striving to supply additional EFD machines to non-compliant stores, particularly in the jewelry sector. To facilitate this, jewelry stores are being encouraged to register for the EFD program.
As the clock strikes 08:30 on February 08, 2025, the issue of VAT collection through EFD machines continues to pose challenges for businesses and regulatory authorities alike.
