Smelling large information gap in the data about registered foreign workers in Bangladesh, the tax authority now takes a wider survey on 40 companies to detect undocumented ones.
As per the data compiled by the Bangladesh Investment Development Authority (BIDA), some 5,345 foreign workers came through the authority's approval from May 2016 to November 2017, tax officials said.
The income-tax authority found the number extremely poor compared to the visible presence of foreign workers in different companies, especially in export-oriented sectors.
Tax officials guess the number to be manifold higher which was not reflected in the BIDA-preserved records.
They said many foreign employees are working in Bangladesh bypassing registration with the BIDA, thereby dodging payment of withholding tax.
A taskforce regarding ensuring tax compliance by foreign workers meets today (Wednesday) to give selected companies approval for inspection, said Serajul Karim, income-tax (legal and enforcement) member of the NBR.
"In view of the paltry data, we have decided to visit some 40 companies wherein foreign workers are employed," he said about the search drive planned for next three months up till end of this fiscal year.
The taskforce has a plan to conduct inspections in the last quarter (April-June) of the current fiscal year, he added.
There are 14,000 foreign taxpayers registered with the income-tax wing of the revenue board which should run into 50,000 at the minimum, he said.
The companies would be selected on the basis of furnished information from the tax-zone offices.
Earlier, the NBR also had conducted such survey on five companies and found 15 illegally employed foreign workers after scrutinising their documents and registers.
"We will take punitive action against those employers who intentionally hid the information of their foreign workers," the tax member said.
However, he said the taxmen would make cautious move keeping the necessity of foreign direct investment (FDI) in mind.
The NBR also plans to change the strategies of survey for surprise visit to the companies instead of current procedure of giving prior information about visit.
They think many of the companies may prepare themselves with information holdback about their foreign employees after getting information from taxmen about their visit.
According to the existing Income Tax Ordinance 1984, foreign workers are required to pay 30 per cent tax on their incomes. However, there is no tax-free ceiling for the foreign workers who are working in Bangladesh.
If any foreign worker, artist or technician left the country without paying tax, the companies concerned would be responsible for the tax evasion.
Tax official said some foreign nationals came as tourist while some come for installation of machines and some as artist or performer.
Any foreigners who stay more than 90 days have to pay tax on their incomes.
To ensure income-tax collection from the foreign workers, the NBR earlier set up desks in the airports and customs ports to collect unpaid tax before they leave the country.
Despite several attempts, the BIDA executive chairman could not be contacted over phone.
Talking to the FE, former president of the Foreign Investors' Chamber of Commerce and Industry (FICCI) Rupali Chowdhury said most of the large foreign companies usually bring foreign employees following the legal procedures and registration.
"As there is no data how many foreigners are working in the country, the authority will not be able to predict the actual level of non-compliance," she said.
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