A vast majority of registered companies across the country do not submit annual income-tax returns, thus evading payment of a significant amount of revenue to the government.
According to National Board of Revenue (NBR) data, 39,000 companies submitted income-tax returns last year out of 138,000 registered with the Registrar of Joint Stock Companies and Firms (RJSC).
The data show some 52,000 of the registered companies have electronic Taxpayer Identification Number (TIN).
Submission of annual income-tax return is mandatory for all companies as per the Income Tax Ordinance 1984.
The remaining 85,000 companies, which are listed with the RJSC, do not even have their e-TIN and escape payment of tax revenue to the public exchequer.
Corporate tax contributes 72.52 per cent to the aggregate income tax collection, according to the annual report 2013-14 of the NBR.
The NBR collected Tk 313.33 billion in income tax from the companies in FY '14 out of Tk 432.07 billion aggregate amount of income tax, the annual report reveals.
The revenue board received 27.48 per cent of the income tax from other than company sources, including individual taxpayers.
For the current fiscal year, 2016-17, the government has set a substantially higher target of mobilizing Tk 733.68 billion in income tax.
The amount is 36.11 per cent of the aggregate tax-revenue-collection target of Tk 2.03 trillion. Tax officials said income-tax collection could be raised significantly if the tax authority managed to make all the taxable corporate entities tax-compliant.
To address the lacuna in corporate-tax payment, the NBR recently held a partnership dialogue with the RJSC for sharing data between the entities for raising tax collection.
The NBR has sought cooperation of the RJSC in inclusion of company information in its preserved profile after e-TIN registration. It also proposed to make e-TIN certificate mandatory at the time of submission of return to the RJSC.
The tax authority also sought access to wealth information that a company furnished in the annual return to the RJSC.
The NBR assured of providing cooperation to the RJSC by sharing father's name and date of birth of each taxpayer from its e-TIN system at the time of verifying e-TIN of the company directors during its registration.
Talking to the FE, an income tax commissioner said many of the registered companies are inoperative and formed for some specific purposes.
"Taxmen could not trace them under the manual system although tax-return submission is made mandatory for companies," he said.
"Some companies obtain TIN, use it for enjoying different services but do not submit tax returns," he added.
Submission of tax-return certificates should be made mandatory instead of TIN certificates for companies to ensure return submission, he suggested.
The NBR receives corporate tax mainly from commercial banks, multinational companies and from withholding tax. Of the tax-registered companies, many show loss in business operations in their annual tax return.
According to the income-tax ordinance, payment of a minimum tax is mandatory on gross receipt of companies irrespective of profit and loss.
Dr Ahsan H Mansur, Executive Director of Policy Research Institute (PRI), said coordination and integration with the other entities can help in increasing tax compliance of corporate taxpayers.
"Automation of import and export activities and implementation of VAT law are required for enhancing tax collection from companies," he said.
He is of the opinion that the NBR has to ensure recorded financial transaction by developing database.
SM Humayun Kabir, FCA, income-tax-subcommittee convener of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said there is adequate legal framework to bring corporate taxpayers under tax net.
"Under the existing tax law, it is impossible for a company to run business without having TIN," he said.
He suggested that the NBR should conduct survey to find out the reason for poor rate of tax return submission by corporate taxpayers.
"Maybe, those 40,000 companies are running full-fledged business in the country," he said on a note of skepticism about tax dodging.
Tax officials said only 2.62 per cent taxpayers contribute 54.98 per cent of income-tax revenue, largely because of such large-scale non-compliance.
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