Taxmen will act as judges too as Bangladesh's new income-tax law vests in them judicial power to try tax delinquencies, for the first time, in government bid to enhance revenue.
The tax collectors can pronounce 'verdict' in the fashion of a civil court, instead of issuing order, to ensure tax compliance and thus prevent tax-dogging.
Under a provision of the Income Tax Act 2023, which came in to effect on June 22, 2023, the tax authority has been given the judicial authority under the Code of Civil Procedure. And the quasi-judicial order will be considered civil court's verdict.
"Tax authorities' order, under any of the initiatives or action under this law, would be considered Civil Court order," section 211 (6) of the country's upgraded income-tax law reads.
The provision (6) of section 211 is a newly incorporated one which was not in the previous Income Tax Ordinance 1984.
Tax officials say taxmen were empowered under the Code of Civil Procedures 1908 earlier in the Income Tax Ordinance 1984, too, but the new act has clarified some of the dormant provisions for better execution of the law.
Civil court is a court of law that deals with disagreements between individual people or private companies, rather than with criminal activity, according to Cambridge dictionary.
The Code of Civil Procedures 1908 is an act to consolidate and amend the laws relating to the Procedure of the Courts of Civil Judicature.
The previous income tax ordinance was in English which has been translated into Bengali wherein the provision is defined clearly, they add.
Officials say the government pins hope on this toughening of the legal procedures for enhancing revenues to finance incremental nation budget which perennially shows huge deficits for lower incomes than higher targets of spending in sync with the country's LDC graduation process.
They hope it would help in proper enforcement of the tax law and thus minimize tax evasion and increase the tax-GDP ratio-billed one of the lowest in the world.
Currently, less than 1.0 per cent of the country's population pays direct tax and submits tax returns.
Tax experts, however, raised concern over the new provision to empower taxmen with judicial power.
They pointed out that the National Board of Revenue (NBR) is a quasi-judicial body which has separate function than that of the judiciary.
Tax expert and Taxation and Tariff Subcommittee chairman of the Metropolitan Chamber of Commerce and Industry (MCCI) Adeeb H Khan says impartiality is the motto of a judicial body while tax authority is responsible for tax collection.
"State has three pillars-executive, judiciary and legislative. Those are distinct ones," he said. "NBR is a part of the executive. I wonder how it could be merged with judiciary."
He fears such provision impairs the right of taxpayers who want more transparency, robust appeal procedures and hassle-free environment.
Mr Khan, also the head of KPMG's operations in Bangladesh, deplores that the new law has added 'bureaucracy'.
He also pleads for revision of two other provisions in the law where taxmen have been empowered to determine market value of products and approve any change of accounting policy of businesses.
Under the new Act, tax officials can enjoy other powers to oblige taxpayers to attend hearings and furnish all required documents and take oath before hearing.
Under the section 211 two new provisions have been interpolated in the tax law imposing a timeline of maximum 15 days to preserve confiscated documents of taxpayers.
Appeal tribunal has been empowered to compel taxpayers to attend hearings and furnish requisite documents, investigate and inspect, and form commission to receive evidences under the new act.
Earlier, the power was delegated to deputy commissioner of taxes, additional commissioner of taxes, commissioner of taxes, Director-General of the Central Intelligence Cell and appeal commissioner.
Fellow member of the Institute of Chartered Accountants of Bangladesh (ICAB) Jasim Uddin Rasel thinks the new provision will increase the accountability of DCT because now he would have to maintain a record of the reason for exercising the power of retention of documents.
"The DCTs would have to obtain prior approval from the commissioner of taxes to retain the documents for more than 15 working days," he says.
"Practically the provision would not be beneficial to the taxpayers because the justification or approval from the higher authority is only the record-maintaining work," he adds.
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