The ratio of population and actual taxpayers, implying those who submit their annual tax returns, in Bangladesh is at one of the lowest levels among the South-Asian countries, largely due to lax tax compliance and 'fear factor' among the taxpayers.
The dropout rate is relatively high among the individual taxpayers who escape from the net after obtaining taxpayers identification numbers, (TINs) that were obtained for any purpose, after submitting tax returns in a particular tax year.
Tax officials found the number at above 1,00,000 in a year.
In fiscal year (FY) 2011-12 the number of tax return submissions by individual taxpayers was 1.1 million but it got reduced to 1.0 million in FY 2012-13.
The National Board of Revenue (NBR) has moved to find out the reason for dropout of such a large number of individual taxpayers, said NBR chairman Ghulam Hussain.
"We predict they are seasonal taxpayers. Perhaps, they submitted tax returns for any specific purpose in a tax year," he added.
The NBR has designated a member for investigating reasons for the decline in the number of actual tax-payers, he added.
The NBR chairman said the reason may be low tax compliance or fear factor.
"Tax payment by professionals is relatively low. We have scrutinised tax files of the country's renowned physicians and found some interesting information," he added.
The consultancy fees of the renowned physicians have been shown at an
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amount between Tk 400 and Tk 500 in the relevant tax files which is very much unrealistic, he added.
Hardly 10 to 15 per cent of physicians are paying the due amount of taxes on their income earnings, he added.
While the country's highest individual tax-payers are mostly the contractors and sub-contractors who are subject to AIT payments, none among the high-profile individuals among the leaders of the chamber bodies or 'renowned' businesses-men have come in the first row among the top taxpayers. Â
The NBR receives 30 per cent of the AIT from contractors' and sub-contractors' bill, followed by 20 per cent from importers and 16 per cent from interest earnings on term-deposits with banks and non-banking financial institutions.
In FY 2011-12, the NBR collected Tk 24.50 billion as income taxes from companies and individual taxpayers while Tk 94.71 billion came in the form of AIT.
Tax officials said tax payment ratio by the salaried person is relatively higher among the individual taxpayers. As per the latest available data in the annual report of the NBR, one-third of the individual taxpayers belong to the salaried group.
In FY 2011-12, collection of income taxes from individual taxpayers stood at Tk 30.32 billion, the amount declined by Tk 290 million in FY 2012-13, according to the annual report of NBR.
Income tax collections went down due to higher tax refund system for individual tax-payers. Taxmen said tax-payers can claim up to 15 per cent of refund of their paid taxes while the minimum income tax rate remains at 10 per cent.
Tax authorities fear a fall in individual tax collection due to the fiscal measures incorporated in the Finance Bill 2013 that might 'eat up' taxes of the salaried persons with tax rebates.
Income tax officials in different field offices said the budgetary measure offered higher tax rebate facilities for the individual tax-payers who have their annual income up to the level of Tk 460,000.
In the budget for FY 2013-14, the government incorporated a tax measure that relaxed TIN holders, not having taxable income, from mandatory submission of tax returns. The measure may also cause a fall in the number of tax returns. It may also result in a mismatch between the actual number of tax-payers and the TIN holders. Â
Income tax collections doubled between the period -- FY 2011-12 and FY 2013-14, largely due to widening the AIT net. (Concluded)
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