Don't put more tax burden in pandemic
In the middle of the pandemic, the government should continue providing support to businessmen and refrain from imposing new tax, economists say.
The National Board of Revenue
should be strengthened so it collects more revenue, prevents trade-based money
laundering and imposes wealth tax. The introduction of electronic tax reduction
system and tax automation will also help broaden the scope of tax collection,
they suggest.
The NBR is far from achieving
the revenue target in the first six months of the ongoing fiscal year, said
Muntaseer Kamal, senior research associate of the Centre for Policy Dialogue,
in a discussion organised on Wednesday by the NBR ahead of preparing the
national budget for fiscal 2021-22.
The reasons behind the
regulatory body falling short of the target are a reduction in corporate tax
rates, tax exemption in imports of personal protective equipment and other
essentials, and providing tax holiday benefits to some manufacturing
industries.
To help the economy rebound, the
government should continue the privileges, speakers said at the discussion.
The CPD said the tax-GDP ratio
would rise if the NBR stopped money laundering and tax evasion. That is
possible if the Transfer Pricing Cell of the NBR becomes stronger.
According to different
international and local research organisations, on average $1,000 crore are
syphoned out of the country every year.
On different occasions,
Washington-based research organisation Global Financial Integrity and
Transparency International Bangladesh said at least $12,000 crore had been
laundered from Bangladesh over the last 15 years.
The cases that have drawn
attention of the court are mostly trade-based money laundering.
While importing products,
importers show higher prices for cheaper items, keeping the excess money
outside the country. Similarly, in exports lower prices are shown for pricey
items not to transfer the whole amount back to the country.
The NBR terms the processes
over- and under-invoicing.
The CPD also said the
opportunity to whiten untaxed money should not be extended.
People are allowed to invest
untaxed money by giving a 10% tax without a question asked about the source of
money, and that is not only creating an unequal competition in the market but
also discouraging honest taxpayers.
The think-tank also insisted on
ensuring submission of tax returns by 50 lakh taxpayers having electronic tax
identification numbers (e-TIN) and introduction of an electronic tax deduction
system to stop tax evasion.
Professor Mustafizur Rahman,
distinguished fellow of the CPD, told that at a time when the private sector's
growth had been suppressed because of the pandemic, they should not be
pressurised into paying more tax.
Industries should be able to
function in a business-friendly environment, Mustafizur said.
The government should not reduce
expenditure but money should be used wisely, he said, emphasising the need for
completion of priority projects on time without any wastage of funds and
generation of labour-intense employment.
Dr Ahsan H Mansur, executive
director of Policy Research Institute, said the government would have to chalk
up a plan to rejuvenate the economy, rather than going for fresh taxation.
Increasing revenue collection is
a very challenging task. What the NBR now needs to do is strengthen its base by
making the revenue collection process online as well as by reining in tax
evasion.
The revenue board should also
focus on stopping capital flight, Ahsan pointed out in a written statement.
The government would have to
find new ways to increase revenue collection. There will be new challenges
after the LDC graduation, when Bangladesh will have to offer tariff facilities
to other countries too, leading to a fall in revenue collection.
So, necessary preparations
should start from now on, the economist said.
PricewaterhouseCoopers (PwC)
Bangladesh, a global think tank, suggested some reforms in the revenue
structure.
Mamun Rashaid, managing partner
of the PwC, Bangladesh, said his organisation had talked to at least 200
companies and their main concern was operational expenses.
In the last budget, the
government allowed businesses to spend up to 0.5% of the total turnover in
promoting products, tax free. The NBR made the same rule applicable to royalty
and technical expenses.
Mamun proposed that the
provision in the tax law be changed considering the huge investment the
manufacturing sector has to make in market researches and promotional
activities.
There is no alternative to
increasing investment for further national growth, he said.
On behalf of the PwC, its
Director Kapil Basu recommended amendments to the tax law.
The law has no provision
obliging foreign organisations, which work in Bangladesh on a temporary basis,
to submit tax returns, he said, adding that a provision should be incorporated
in the law to bring them under the tax net.
Mamun, however, asked the NBR to
exempt foreign companies, which have opened branches in Bangladesh and are
working on expanding information technology here, from tax.
Non-residential companies, such
as Facebook, Google and YouTube, operating in Bangladesh from outside the
border fall victim to double taxation, said PwC Manager Shahadat Hossain.
Explaining double taxation, he
said people paid these companies through credit cards while purchasing their
services, and banks cut 15% from the payment as VAT before transferring the
rest to the bank accounts of the companies.
The NBR is claiming 15% VAT
again on the deposited amount. The issue must be taken into account and
addressed, Shahadat said.
The NBR is imposing additional
VAT only on 766 companies responsible for environment pollution, as listed by
the Department of Environment, said Masud Sadiq, a member of the NBR.
Following the discussion, NBR
Chairman Abu Hena Md Rahmatul Muneem said, "There are discrepancies
between reality and research. We have pressure on us to increase revenue
collection and an obligation to protect the interests of local industries and
consumers."
To expand the tax net, the NBR
is contemplating special measures to bring car and house owners under taxation.
The regulatory body will audit their tax documents along with their residential
holding papers and car registrations.
The authorities will also check
if those investing in savings certificates are duly paying taxes, Abu Hena said
adding that tax automation would be introduced at every layer of tax collection
in the future.
Source: TBS