The VAT Audit, Intelligence and Investigation Directorate of the NBR found evidence of tax evasion in an investigation into the bank’s business operations, the directorate’s Director General Moinul Khan said on Thursday.
The NBR filed another case against the bank for not registering for services, for which VAT should be paid.
The investigation report and the case documents have been sent to Dhaka West VAT Commissionerate, which has also been asked to monitor whether the bank is paying VAT regularly.
Jahangir Hossen Howlader, managing director of Grameen Bank, said people from the VAT office visited the bank and asked the officials to meet them on Tuesday, but did not say anything about the cases.
“Grameen Bank has been enjoying VAT exemption as a social organisation. We will need to check whether the bank should pay VAT under new rules.”
“People in our accounts section can talk about this well. We will pay VAT and taxes, if necessary. But this bank is owned by the poor. The pressure will be ultimately on them.”
A VAT intelligence directorate team, headed by Deputy Director Nazmun Naher Kaisar, unearthed the “irregularities” after reviewing Grameen Bank’s accounts from January 2011 to December 2016, the directorate said.
The investigation found Grameen Bank has been offering banking and nan-banking services under S056 code since its inception, but it did not register in line with the VAT law.
Organisations supplying taxable goods and services must register for VAT in line with the law. All banks and non-bank organisations must register regardless of their turnover.
A Statutory Regulatory Order stipulates that the law will be applicable to all organisations defined under the banks and financial institutions defined by the Bank Company Act and that offer banking and non-banking services in exchange for commission, fees or charge.
The VAT intelligence directorate says 15 percent VAT is payable on the commission, fees and charges collected by Grameen Bank on microcredits.
It is also supposed to pay tax at source for its expenses in line with the law.
It paid Tk 34,910 in VAT against its income from 2011 to 2016, but it was supposed to pay about Tk 303.7 million, according to the investigation report by the VAT intelligence agents.
The bank will have to pay nearly Tk 140 million as 2 percent interest on the due VAT. It has paid over Tk 85.4 million tax at source, but it was supposed to pay about Tk 240 million. The interest on the due tax at source is over Tk 72.3 million. So the total dues stand at about Tk 670 million, according to the investigation report.