New watchdog to nose out MNCs\' profit shifting

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Doulot Akter Mala | Published: August 11, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

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Government's revenue authority is raising a new watchdog team styled 'resource pool' to nose out profit shifting by multinational companies from Bangladesh illegally.
Officials said the National Board of Revenue (NBR) is forming the strong surveillance team with best of the bunch of taxmen under the transfer-pricing law to check the flight of funds.    
Field-level tax officials will be drawn into the resource pool. They will work for detection of cross-border financial transactions, Base Erosion and Profit Shifting (BEPS) by the MNCs in their respective tax zones.
The NBR will develop skill and arrange capacity-building training at home and abroad for the officials in the resources pool.
To form the resource pool, the Transfer Pricing Cell (TPC) of the NBR recently sent letters to all of the tax offices across the country to nominate taxmen -- ranking from deputy commissioner to tax commissioner -- for the pool of combatants against the alleged financial offence.
A senior official of the TPC said enforcement of the transfer- pricing law will need a group of expert tax officials in the NBR and field-level tax offices as well.
Currently, there is a seven-member team at the Transfer Pricing Cell to work on implementation of the law.
"The TPC will start auditing tax returns of the multinational companies from January. After completion of auditing, taxpayers may file appeal against assessment by the taxmen," he said.
The process would require involvement of some more tax officials in the field-level tax offices along will the six transfer-pricing officials, he said.
Officials said the NBR recently allocated a separate cell for the TP work with all necessary logistics at their command.
Transfer-pricing officials will scrutinize the Statement of International Transaction (SIT) of the multinational companies operating in Bangladesh in the cell.
There are some 175 MNCs in Bangladesh. Tax officials said along with sister concerns and liaison offices the number would be around 400.
Tax officials said initially the auditing by the TPC will adopt a go-slow policy as both taxmen and the MNCs need some time to acclimatize with implications of the law.
The government introduced the TP law in 2014 although it was passed by parliament in 2012.
The law empowers the tax authority to scrutinize international financial transactions by the taxpayers and oblige them to keep record in a prescribed form to check profit shifting through transfer-mispricing mechanism.
It has been alleged that high rate of corporate tax in the country discourages many MNCs from showing the right amount of profits they make annually. They shift their profits to their companies or sister concerns located in the countries where tax rates are comparatively low.
Reports based on findings by international watchdogs say that huge amounts of funds flow out of Bangladesh annually for a number of reasons that include lax execution of the law and high accumulation of resources with certain individuals or businesses.                     
doulot_akter@yahoo.com