NBR freezes Robi's bank accounts over unpaid VAT

The National Board of Revenue yesterday froze the bank accounts of Robi Axiata Ltd, the country's second largest mobile operator, on allegations of dodging of Tk 18.72 crore in value-added tax and supplementary duty.

Robi 'evaded' tax by not paying in due time, said the Large Taxpayers Unit, a field office of the NBR. Subsequently, it asked banks to freeze the accounts of the mobile phone operator for three days.

The operator denied the allegation, saying that it is a longstanding dispute with the NBR over VAT, said Ekram Kabir, vice-president of Communications and Corporate Responsibility at Robi.

The LTU, however, disagreed that there was any dispute surrounding the issue.

"The other operators are paying the VAT and SDs on the same items, but Robi has not paid," said Md Matiur Rahman, commissioner of LTU, VAT.

The LTU had several meetings with Robi and requested them to deposit the tax to the state exchequer.  

"But they did not comply. Under the circumstance, I have decided to be strict as per law. If they (Robi) pay VAT tomorrow, we will unfreeze their bank accounts," he added.

The NBR move comes after a team led by the LTU additional commissioner inspected Robi's corporate office on February 7.

The team collected Robi's trial balance for the month of December 2017, summary of site and space rental for July 2017 to December 2017, summary of SIM sales from October 2017 to January 2018, summary of invoices to state-run land phone operator Bangladesh Telecommunications Company Ltd for 2017.

After examining the documents, the NBR field office came to the conclusion that the mobile phone operator had unpaid supplementary duty and VAT on space rental, SIM sales and interconnection service it had provided to the BTCL. The total amount of VAT was Tk 18.72 crore, which Robi did not pay timely, according to the LTU.

The field office then employed a provision of the VAT Act 1991 that empowers a VAT official of the rank of an assistant commissioner and above to freeze bank accounts for certain days.

"The VAT law that the NBR has referred to in the letter they sent to us clearly mentions that a hearing must be organised prior to applying this particular law. It is very unfortunate that no such hearing was organised prior to NBR's drastic measure against us," Kabir said.

It is also interesting to note that the letter refers to certain issues that are being contested before the court of justice, he added. The NBR move comes at a time when Robi started providing 4G services after making investment of about Tk 2,114 crore.

Robi, which became the second largest mobile operator after its merger with Airtel in 2016, posted Tk 280 crore losses in 2017.

The NBR found that Robi avoided Tk 10.35 crore as SD on sales of new SIMs and replacement SIMs and usage.

The operator showed payment of Tk 45.83 crore as SD in its return against its payable SD amount of Tk 56.18 crore for December 2017, according to the field office.

The field office also found that Robi sold 94.42 lakh SIMs from October last year to January this year but it showed sales of 93.61 lakh SIMS and avoided Tk 81.06 lakh tax on SIMs, according to the report.

The mobile phone operator also did not pay Tk 81.71 lakh as VAT on interconnection service given to the BTCL from January to December last year.

Robi has collected VAT from consumers but are not depositing them to the exchequer. "This cannot be," Rahman said.

The LTU VAT also found that Robi did not pay Tk 6.75 crore that was payable as VAT from July to December last year on space rental.

Commercial entities have to pay 15 percent VAT on the rented amount if the space is more than 150 square feet and Robi has not paid the amount for the second half of the year.

Md Bodruzzaman Munshi, deputy commissioner of LTU, said they detected the anomaly after examining the documents of the mobile phone operator.

Earlier this month, the LTU VAT demanded Tk 924 crore as unpaid VAT from Robi from January 2013 to December 2016.

"The Tk 18.72 crore unpaid VAT is not big -- the LTU has several VAT disputes with Robi. If the operator does not respond, we will take steps in phases," Rahman said.