TV channels evading billions

Blitz, Dhaka

Leading private television channels in Bangladesh such as Channel-I, ATN-Bangla, Channel One, NTV, RTV, Ekushey Television [ETV] etc., are continuing to evade billions of Taka VAT each year. As per rule, these channels are required to pay fifteen per cent VAT on the total amount of revenue earnings, while, none of the channels are even paying a fraction of the payable VAT thus depriving the nation of huge amount of revenue earnings each year. Such trend although continues for past several years, none of the officials in the National Board of Revenue [NBR] or in the Ministry of Finance dares to say anything as all of these channels have already established a kind of unseen influence by using the tool of electronic media.

Our reporters have conducted a comprehensive investigation into the issue of evasion of value added tax by the existing private television channels in Bangladesh. It was revealed that, each of the private television channels in Bangladesh are collecting advertisement charges from the advertisers mostly for chunks. With each of the channels, cost for 30 minutes chunk ranges between TK. 70 thousand to 1 hundred thousand. During special events like Eid etc., the charges are increased even three or four times. In this way, the private television channels are getting TK. 6-7 hundred thousand each day from advertisements. As per existing rule, the channels are required to pay 15% [fifteen percent] VAT on the net amount they receive. In this case, each of the television channels in Bangladesh [especially those big ones like Channel-I, ATN-Bangla, NTV etc] should pay at least TK. 90,000 each day to National Board of Revenue as VAT.

ATN-Bangla has already completed more than eleven years in transmission while Channel-I has crossed eight years. Musaddek Ali Falu’s NTV has also completed five years. As per rule, only Channel-I should have paid more than TK. 25 crore in past eight years. But, as per record available with the department concerned, this channel pays only a fraction of the actual payable amount of VAT to the national exchequer.

Commenting on this, a highly placed source in Finance Ministry told our correspondents that, as per realities, each of the private television channels are earning huge amount of money every month, while they are reluctant in paying the exact amount of tax to the government. The source said, these private channels should have paid minimum TK. 2-3 million every month as VAT and taxes, while, as per record, they are not even paying one fourth of the actually accrued amount to the government. “They all are champion tax evaders”, said the source.

Another source to Weekly Blitz that, members of country’s revenue department are rather reluctant in taking initiatives in collecting exact amount of VAT and taxes from the private television channels as in most of the cases, such channels maintain close relations with government high ups. Once the taxation matter in pursued, management of the private television channels starts campaign against the officer concerned or even goes into strong lobbying with influential members in the government.

It may be mentioned here that, the private channels are not only alleged for tax evasion but few years back, owners of Channel-I were related to criminal network when one of the notorious criminals named Kala Faruk was attempting to leave Bangladesh with the identity of being an employee of the channel. Later, it was revealed that Channel-I management were involved in helping this notorious criminal in leaving Bangladesh under the cover of one of their reporters. Although the government started investigation into the matter, the case was later sent to cold storage under instruction from the supreme command in the government.

There is also allegations against the private television channels of smuggling huge amount of money every year for payment of satellite transponder rentals. Each of the private television channels in Bangladesh are using foreign satellite transponders for the transmission of their signals via satellite. In each cases, the satellite owners charge US$ 30-40 thousand per month as rental. A source in the department concerned in Bangladesh Bank told Weekly Blitz that the private television channels were required to obtain permission from the Central bank for remitting such money abroad. But, none of the private television channels did ever obtain any permission from the Bangladesh Bank for remittance of such huge amount of foreign currency each year. It is easily understood that the private television channels are regularly smuggling out the money, which falls under the Money laundering Law of the land.

Meanwhile, there is allegation on evasion of VAT by most of the music companies in Bangladesh such as Sangeeta, Soundtek, CMV, Ganchil, Laser Vision, Ektar, Sonali Products, Beauty Corner etc. There are also allegation of evasion of VAT by English medium schools in the country.

According to information, the government is being deprived of huge revenue income from thousands of unregistered English medium schools, which are collecting additional fees from students under VAT (value added tax) imposed in this fiscal year.

According to the education ministry, there are around 18,000 English medium schools across the country with more to be launched. But only 625 such institutions have been registered under seven secondary and higher secondary education boards, Directorate of Secondary and Higher Education (DSHE), and Directorate of Primary Education (DPE).

Taking the opportunity of authorities' apparent indifference and lack of specific rules, three types of English medium schools - kindergartens or nurseries, junior Cambridge, and Cambridge or senior Cambridge - are rapidly growing in urban areas throughout the country. The industry is mushrooming especially in the capital.

The government has several times tasked the school authorities to get registered, but most of them did not pay any heed to it. Many schools even did not bother to apply for registration.

However, no schools have ever been handed down any kinds of penalty.

Pijush Kanti Nath, first VAT secretary of National Board of Revenue (NBR), said it will be easy for them to collect VAT from English medium schools if the ministry and other authorities concerned send them a list of such institutions.

The education ministry, seven education boards, DSHE and DPE, however, are yet to prepare a list as a large number of schools did not register willingly to avoid different types of restrictions.

"Most of the schools don't want to register even after receiving letters to that end several times.

The authorities did not register willingly in a bid to avoid registration fees and newly imposed VAT," said M Abbas Uddin, senior assistant secretary of the education ministry.

Ataur Rahman Khan, school inspector of Dhaka Secondary and Higher Secondary Education Board, said only 66 English medium schools are approved and registered with Dhaka Education Board. The registration process of another 34 institutions is pending, he added.

According to the condition of application form for registration, an English medium school has to pay TK 5,000 as registration fees and TK 7,000 as renewal of registration in every five years.

Directorate of Primary Education supervises the kindergarten and nursery preparatory schools from standard I to V. Regional education offices of DSHE monitors the junior Cambridge schools from standard VI to VIII. Secondary and higher secondary education boards supervise Cambridge and senior Cambridge schools for O and A levels.

All kinds of educational institutions are to be registered under the Education Control Act, 1962. But English medium schools do not fall into the Act, as there were no such institutions in 1962.

Later, the Act has been amended several times but no specific rules for English medium schools were included in the Act.

The Ministry of Education in August 2004 decided that unregistered English medium schools would be asked to register under the Registration of Private School (Amendment) Act, 1989, and the Non-Government School (English Medium) Registration Regulations, 1999.

Top officers of seven education boards said English medium schools should be brought under proper accountability for containing "mismanagement" and "irregularities" of the authorities.

"Formulation of strict guidelines for the English medium schools is very much needed, but the school mismanagement should also be given certain freedom," said Prof Abdul Wadud, examination controller of Dhaka Education Board.

The government is going to establish a regulatory rule to oversee the activities of these schools but the process is advancing slowly due to bureaucratic tangles, sources in the education ministry said.

"A draft on guidelines for English medium schools is now in the law ministry. We hope it will help remove the irregularities of the institutions," said Abbas Uddin, senior assistant secretary of the education ministry.

Posted on 04 Oct 2007 by Root