Many corporates fail to submit returns

Half of the corporate taxpayers across Bangladesh couldn't submit their returns by the deadline after the government made verified audit report on their financials mandatory for the 2021-22 fiscal, officials say.
The fault on return submission unveils, by default, a subtle blame game between the big businesses and the auditing institution over the Document Verification System (DVS).
Taxpayers alleged an exorbitant cost involved in getting audited financial statements from chartered accountants while CAs say taxpayers are reluctant to give requisite documents to "avoid transparency".
Taxmen, as such, feel the necessity of resolving the issue immediately as corporate taxpayers contribute the lion's share in direct-tax receipts for the public exchequer.
Until February 2022, the revenue board had received 14,905 tax returns from corporates out of 30,000 received every year, according to data available with the National Board of Revenue (NBR).
Time for submission of tax returns expired on January 15, 2022.
However, the Deputy Commissioner of Taxes (DCT) concerned has the authority to extend the timeline by two months upon written application from the companies. In case of failure to submit the tax returns within the timeframe, Additional Commissioner has the power to grant two more months to a corporate entity.
A senior tax official says the corporate taxpayers who have submitted time petitions have to submit their tax returns by May 15 next to avoid penalty.
The NBR signed MoU with the Institute of Chartered Accountants of Bangladesh (ICAB) to ensure a single audit report for a company in order to check tax evasion.
The ICAB developed the DVS and introduced the tool in December 2021.
Meanwhile, the income-tax authority in an order has asked all tax offices across the country not to accept any audit report devoid of DVS verification.
However, small companies say they find it difficult to obtain the DVS- verified financial statement by paying fees of the CAs.
Taslima Miji, the owner of leather accessories company Gootipa, says her small company is a regular taxpayer but this year she is facing difficulties in submitting tax returns within the timeline.
"Accountants are claiming three times higher charges than that of previous years, which my small company is unable to bear," she adds.
She also claimed insufficient number of accountants engaged to prepare the DVS-verified audit report and unusual delays in doing the job.
ICAB president Md Shahadat Hossain, however, refuted such allegation, saying that all of the ICAB members maintain fees schedule of the ICAB that has been determined for private limited companies on the basis of turnover.
He also says there is sufficient number of CAs to prepare the audit report but they need required records and documents for this.
"We have to maintain ethical standards to prepare a financial statement. In some cases, clients are not willing to provide the supporting documents," he adds.
In such cases, he notes, CAs have no way other than to decline to do the task as it is not possible for a compliant accountant to give opinion without evidence.
So far, 25,576 companies have obtained codes from DVS but all are not for the purpose of tax-return submission.
DVC is needed for different purposes, too, including audit for non-government organisations, obtaining loans, donor assistance, and trade licensing.
ICAB members audit some 10,000 to 12,000 financial reports while the NBR receives 30,000 tax returns from corporate taxpayers. Though the submission of CA-audited financials is mandatory in the income-tax law, the practice of submitting fake and fabricated statements has been going on for years, causing loss of tax revenue.
Around a third of the corporate taxpayers have to become transparent giving their actual financial statements from this year through DVS- verified audited report.
CAs say concealment of documents and records by some corporates compelled them to decline their work as the ICAB remained vigilant on this too.
Bangladesh Chamber of Industries (BCI) president Anwar-ul-Alam Chowdhury says some corporate taxpayers may not be willing to show their actual financial records in fear of not getting bank loans.
"Many companies incurred losses in last two years of Covid-19 pandemic who need government's fiscal support," he adds.

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