The National Board of Revenue (NBR) has taken the initiative to tax mobile financial service providers (MFS) as businesses or merchants to increase revenue. For this, the agency has announced plans to make VAT registration or Business Identification Number (BIN) mandatory. At the same time, VAT registration has also been made mandatory for opening bank accounts of businesses. The matter was mentioned in the proposed budget bill for the upcoming fiscal year 2026-27.
NBR sources involved in budget formulation say that some new provisions have been included in the budget to increase the scope of taxes. One of them is VAT registration. A senior NBR official told Prothom Alo on condition of anonymity, “This decision has been taken as part of the initiative to increase the tax coverage in the proposed budget. As part of that, VAT registration is being made mandatory to bring different levels of businessmen under the tax net instead of imposing VAT at first. He also hinted that a limited amount of VAT may be imposed on these institutions in the future.”
According to NBR sources, there are currently 792,000 VAT registered companies in the country. Various business organizations in the country are suggesting to increase the number of these registrations. Therefore, such initiatives are being considered to bring small business enterprises in rural areas under the tax net, albeit with various benefits.
NBR-related people say that currently, mobile banking transactions are being carried out in various shops at the union level of the country. However, mobile financial service providers see such initiatives and plans of the NBR as an obstacle to the growth of digital transactions. They say that it is important to take initiatives to increase the scope of digital transactions before bringing such institutions under the tax umbrella.
In this regard, a top official of Nagad, the postal department’s mobile financial services company, told Prothom Alo on condition of anonymity that more than 70 percent of transactions in the country are still done in cash. At this stage, if institutions involved in MFS transactions are brought under the ambit of tax or VAT, the common people may be discouraged from digital transactions. Therefore, he believes that it is necessary to give some more exemptions to increase digital transactions, including turnover tax.
According to Bangladesh Bank, the number of MFS customers or accounts in the country was about 145 million at the end of January. According to research firm PRI, the number of active MFS accounts in the country is 87.1 million. According to Bangladesh Bank, out of the total MFS accounts, 551,000 are merchant accounts; and 935,000 are personal accounts.
The budget proposal will bring not only MFS institutions but also current accounts of bank business transactions under VAT registration. An NBR official, who did not reveal his name, said, “It is not possible to do business but not have VAT registration. Therefore, registration will be made mandatory for opening new business accounts.” He also said that a deadline will be set for registering existing accounts. The revenue official also believes that if this new step is taken, the number of VAT registered institutions will exceed 2 million in a short time.
Officials of mobile banking institutions say that to open a merchant account for MFS transactions, many types of documents have to be submitted. A trade license is required. Verification has to be done. Now, if VAT registration is made mandatory again, customers may lose interest in such transactions.
According to the Bangladesh Shopkeepers’ Association, the number of shops with trade licenses in the country is about 7 million. In addition, there are various service sector establishments across the country. Most of these establishments are outside VAT registration.
When asked, Arifur Rahman, general secretary of the Shopkeepers’ Association, told Prothom Alo, “Small traders scattered across the country conduct transactions through mobile banking. Various types of transactions are carried out there. Now, if any action is to be taken, we should take our opinions and make decisions after talking.”
The Institute of Chartered Accountants of Bangladesh (ICAB) believes that making VAT registration mandatory as a merchant in the proposed budget for the next fiscal year could create difficulties for small and emerging businesses. The organization expressed such concerns at a press conference organized on the occasion of the budget review on Saturday.
