We’ll install 600,00 electronic fiscal devices by this FY: Genex Infosys executive director

The National Board of Revenue signed an agreement with Genex Infosys Limited in November 2022 to enhance the efficiency of value-added tax (VAT) collection and ensure compliance. Genex Infosys will be responsible for installing Electronic Fiscal Devices (EFDs) to monitor and facilitate VAT collection. In exchange, it will receive a commission from each transaction. The programme is currently in a trial phase and is expected to be fully launched soon. In a recent interview with The Business Standard's Senior Correspondent Reyad Hossain, Genex Infosys Executive Director Md Enayetul Islam provided insights into the system's preparation.

Could you please provide an update on the current status of the EFD installation plan?

As of now, we are in the final stages of the piloting mode for the EFD (Electronic Fiscal Device) installation plan. The testing phase is nearing completion, and we have been working diligently alongside relevant government bodies to conduct comprehensive evaluations to ensure the system's efficiency and seamless functionality. Our primary objective is to meet all the necessary requirements to accelerate the official inauguration. Once we receive the authorities' consent, we will be fully prepared to launch the EFD commercially.

I would say, we are ready, from our side, to launch it commercially. After getting NBR's approval, we will start to install the EFDs and start operation. Hopefully, we will be able to get the final approval within a short time.

How many EFDs do you plan to install by this fiscal year?

As per the agreement we will install 60,000 EFDs by the end of the current fiscal 2022-23 in Dhaka and Chattogram and by the next five years three lakh machines will be installed in the around 27 types of selected business entities. I hope we will be able to install the expected three lakh EFDs before the scheduled time. For this purpose, necessary preparations have been made from our side so far. 

How viable is the collection of VAT through private agents, especially considering the government's previous challenges?

Deploying private collection agents or agencies to collect VAT is a mainstream idea. Numerous countries have effectively demonstrated private collection agents to fortify sales and VAT collection rates. This well-established approach allows governments to concentrate on policy implementation, streamline procedures, and amplify public services.

In that case, what process will be applied to collect VAT through this system?

After installing Electronic Fiscal Devices (EFDs) in business establishments, business entities will input every transaction into the EFD machines, and the data will be automatically generated in the EFD Management System (EFDMS) maintained on the dedicated server of the National Board of Revenue (NBR). Using this system, the challan or money receipt will be generated after receiving the auto message. The EFDMS will also include the calculation of Value Added Tax (VAT) at the rate determined according to the type of business or product. The Ministry of Finance will be connected with the Integrated VAT Administration System (IVAS) in this process. Therefore, as soon as the transaction takes place, the NBR will be informed of the amount of VAT through the EFDMS maintained by them. On a monthly basis, the NBR will obtain the total VAT amount collected through the EFDMS.

Concerns have been raised regarding potential harassment of businesses and opportunities for irregularities with VAT collection through EFDs. How would you address these concerns?

Such concerns are entirely unfounded. We are digitalising the entire VAT collection system on behalf of the NBR by dint of a robust private collaboration. We restrict our in-person engagements with traders solely to the act of connecting to the EFDs or Sales Data Controllers (SDCs) installed at their respective establishments

How secure are the data and transaction information of private institutions and traders? What measures do you take to ensure data security?

Our exclusive responsibility is to alleviate the administrative load on the National Board of Revenue (NBR). While the NBR retains transaction data for trade and retail partners, we refrain from interfering in that domain. Our VAT collection system is entirely automated, guaranteeing the highest level of security and confidentiality for trade partner data and transactions. The role of Genex Infosys revolves around being a private collection agent only, along with offering support to NBR officials in their revenue collection endeavours.