The prepaid value-added tax (VAT) was introduced on Saturday under the Guest Control Order 1984 that had lost much of its effectiveness, and the government failed to earn revenues because of tax dodge.

NBR officials hope the new system in which the hosts have to pay before they throw parties would cut tax fraud.

According to the rule, 150 guests are allowed to be entertained without tax in a marriage ceremony or religious and cultural functions. Functions with 151 to 1,000 guests are subjected to a tax of Tk 20 a person. If the number of guests crosses 1,000, each additional person has to pay Tk 10. Violators are subjected to a fine of twice the actual amount.

"Earlier the people were used to pay tax after the function, but now they have to pay before the function if it crosses the number of guests 150," a NBR senior official explained.

The NBR, in a circular last month, handed the responsibility over to VAT and customs officials of enforcing the rule that was earlier implemented by the district commissioner (DC).

"The DC office lost a huge amount of revenues," the official said.

The law was amended last year while it allowed 100 persons without tax. A function entertaining between 101 and 500 persons were supposed to pay Tk 25 each.

Community centre managers said that at least 250 people attend any marriage or cultural function. Some occasions are attended by more than 1,000 people. They said that the guest control order is totally ignored now.

Almost every marriage that takes place in the city entertains more than 150 guests without paying tax. In a recent ceremony in Dhanmondi, a rich businessman entertained more than 3,000 guests on the occasion of his son's wedding without paying tax. Every weekend, lavish weddings are taking place in homes, community centres and big restaurants.

It is often alleged that although owners of the premises where functions take place collect tax from customers, the state never gets it.

The customer is usually unaware of the expenses and makes a package deal with the owners of the premises. The owners simply do not pay the tax to the state.

Last year, the food ministry reformulated the Guest Control Order 1984 in a bid to stop waste. The authorities described the reformulated rule as time-befitting, pragmatic and people-oriented.

Earlier, the law allowed 100 guests without tax, but the ministry found the law unrealistic because of the small number of guests.

Dhaka City Corporation owns about 35 community centres, while there are nearly 100 centres run by the private sector. The managers of some centres said they are unable to pay tax, which might take away their business.