Accounting software

VAT wing seeks big cos’ IDs, passwords

Trade bodies, including MCCI, oppose move

| Updated: August 16, 2022 12:46:03

VAT wing seeks big cos’ IDs, passwords

The VAT authority has asked large companies to furnish the user identification numbers (ID) and passwords of their respective accounting software so that it can scrutinise the financial details to stop VAT evasion.

The large taxpayers unit (LTU) under the value-added tax (VAT) wing of the National Board of Revenue (NBR) sent letters to 110 companies, seeking the confidential codes.

The unit has sought the passwords and user IDs of the companies' own accounting software and the NBR-approved software (if applicable) within seven days of issuance of the order.

In default, the LTU would take legal action against the companies for violation of law, rules and order. The LTU issued an order in this regard on August 3, 2022.

The trade bodies have opposed the NBR move, since the user IDs and passwords are treated as confidential by the business entities.

In a recent letter to the LTU, the Metropolitan Chamber of Commerce and Industry (MCCI) that has 51 members in the LTU has requested the NBR to reconsider the decision.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) sources said they would also request the LTU to reconsider the decision.

Wahida Rahman Chowdhury, commissioner of the LTU, said the unit will sit with the MCCI on August 23 next to know their opinion about sharing the User IDs and passwords.

Already, representatives from HSBC and Standard Chartered Bank visited the LTU to discuss the issue and that they were convinced about sharing the required information, she added.

"We have sought the access to cross-check sales data furnished in the VAT returns and actual accounts," she said.

The NBR's Statutory Regulatory Order (SRO) on using accounting software has made it compulsory for the companies to give access to the VAT authority, she said, adding that VAT officials do not have real-time data access now to ensure transparency of the companies.

If the NBR wants to award Authorized Economic Operator (AEO) status and approve applications of companies, it should have a clean track record of VAT and tax payment, she added.

Ms Chowdhury said that when interconnectivity would be established, NBR officials would get access to the accounts of the companies just like the Electronic Fiscal Devices (EFDs) that are now in operation.

"We have only sought the super user read-only IDs and passwords. VAT officials would not be able to modify or temper it," she added.

In some cases, VAT officials confiscate books of accounts, computers, software and other accounting documents during any crackdown as they are empowered by the law.

Ms Chowdhury said the LTU sought the user IDs and passwords as confidential documents.

In case of detection of any other software in future apart from the NBR-listed ones or companies own software, the VAT authority would consider it an attempt to evade VAT by providing false information. In that case, the NBR will take legal action as per the VAT law, the order said.

The companies will have to obtain prior approval of the VAT LTU commissioner if they intend to use any other accounting software. They have to furnish the user IDs and passwords on a mandatory basis.

Examination of VAT returns and audit activities would be easier if the VAT authorities can supervise through the automated system, the order said.

Farooq Ahmed, secretary general of MCCI, said the chamber is willing to extend all cooperation to automate the revenue administration. However, sharing the user IDs and passwords is a sensitive issue due to its confidentiality, he said.

In case of any deviation, pros and cons of the businesses' secrecy could be leaked to the competitors of the companies which would be unexpected, he added.

"User IDs and passwords are a highly personal matter of the companies. It is not fair or may not be decent to share with others," he wrote in the letter.

Such an order may give a negative signal to the businesses in an era when the country's Prime Minister is repeatedly instructing the authorities concerned for ensuring 'ease of doing business', according to the MCCI letter.

The development partners and foreign investors who are closely following the country's businesses and trade may consider such decisions immature, it added.

Proper functioning of accounting software can be ensured without sharing user IDs and passwords and technological experts can be consulted for this, said Mr Ahmed.

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