Large corporates pay 11.31pc higher yet taxmen fail target in FY24

Large corporates paid 11.31-percent higher taxes in the just-concluded financial year due to some fiscal measures and some banks' higher operating profits, yet taxmen failed their annual target.
The large taxpayers' unit (LTU) under the income-tax wing of the revenue board collected Tk 287.82 billion in direct taxes last year against Tk 258.58 billion in FY 23, provisional data of the National Board of Revenue (NBR) showed.
However, the annual tax collection had lagged behind the target by Tk 42.18 billion until June 30, 2024.
Tax officials say a major share of corporate taxes comes from the banks and non-banking financial institutions, contributing to the moderate growth in revenue collection year on year.
A senior tax official said, "The data is still provisional which would be updated later after getting actual collection figure from ibas++."
He said the imposition of capital-gains tax on corporate taxpayers, source tax on banks' investment in bonds and operating profits of some banks contributed to the higher LTU tax collection last year.
The official, however, said operating profits are not major indicator on tax collection as loan write-offs would ultimately shrink tax liabilities.
Corporate tax rate was unchanged in FY 2023-24 for all companies, including banks.
However, given the limited number of corporate taxpayers for years under the unit, officials have found achieving "the ambitious revenue- collection growth difficult", they said.
Tax-collection target for LTU from income tax was Tk 330 billion for the just-concluded financial year.
In the first six months of the current calendar year, most of the banks earned hefty operating profit.
The state-owned Sonali Bank is among the banks that have seen operating profit increase.
Sonali earned an operating profit of Tk 22.60 billion in the January-June period. The bank's profit for the first six months of 2023 was Tk 16.80 billion, according to Bangladesh Bank data.
Rupali Bank made a profit of Tk 4.50 billion while private-sector Southeast Bank Tk 5.79 billion and Social Islami Bank Plc (SIBL) Tk 2.11 billion, according to available official data.
According to a recently published handbook of LTU, income tax, the strategy to chase the tax collection- targets included auditing, resolving court cases having high tax-collection potentials, realizing arrears, advance taxes, encouraging alternative dispute resolution, and intensifying intelligence and investigation activity.
Tax officials said the original target for LTU was Tk 350 billion for FY 24, expecting a 35-percent growth over the previous fiscal's target.
Nearly 40 per cent of the large- taxpayer revenues come from source taxes. In FY 23, the LTU collected Tk 101.53 billion as source taxes out of Tk 258.58 billion.
Source-tax collection from contractors and sub-contractors was the largest source of LTU's tax receipt followed by bills in Bangladesh Bank, and salaries.
LTU's tax collection turned onto positive trajectory in the last three years. It had marked a negative 1.40- percent growth in FY 2021-22.
Banking sector contributes a major share of around 36 per cent in LTU's revenue followed by mobile-phone companies 11 per cent and tobacco manufacturing 5.0 per cent.
The LTU wing of the National Revenue Board or NBR has a base of a total of 860 individual taxpayers-mainly directors and sponsors of different companies.
Some 65 banks, 48 general insurance companies, 35 life-insurance companies, 81 merchant banks, 39 leasing and investment, six telecommunications companies, seven food and beverage companies, 14 garment companies, 22 textile and 14 pharmaceutical companies are among the cash cows for LTU.

[email protected]