Many individuals, businesses ignore digital tax identity

Many business entities and companies in the country shun obtaining eTIN (electronic taxpayer identification number), ultimately resulting in a yawning gap between the potential and the actual receipt of tax revenue.   
Officials said such large-scale dodging of digital tax identity made government's ongoing drive to enhance revenue collection, especially from corporate tax, lose its gear.
They said an initial inspection by the National Board of Revenue (NBR) found only 32 per cent or 43,495 out of the total 1,35,542 companies registered with the Registrar of Joint Stock Companies and Firms (RJSC) possessing eTIN.
The revenue board has launched the two-stage scrutiny to find out the companies without eTIN, said a senior official of the NBR.
In the first phase, taxmen are crosschecking the RJSC-registered companies with TIN database of the NBR. In the second stage, they are detecting non-compliant eTIN registered companies by scrutinising the list of eTIN-holding companies with the data of the companies submitted with tax returns.   
According to Institute of Chartered Accountants of Bangladesh (ICAB) data, there are some 18,000-19,000 companies who obtained audit report while 43,000 submitted tax returns.
Asked, taxmen could not provide information as to how those taxpayers submitted their tax returns without audit reports.
As per income tax law, companies must submit their audit reports along with the tax returns to the tax authority.
Asked about this law point, the senior tax official said the NBR is working on the findings to ensure compliance by the corporate taxpayers.
He said eTIN registration by companies is facing some difficulties as RJSC data are not updated or automated yet for all companies.
According to an analysis by the NBR, taxmen found only 25 per cent of taxpayers paying taxes spontaneously. Nearly 75 per cent of tax revenue comes from other large corporate sources, it showed.
Only 1.1 million individuals and companies are submitting income-tax return out of country's 30 million people who belong to the middle-income group, the NBR said.
"Income tax should be Tk 700-800 billion from 30 million people, excluding income taxes collected at source and companies' tax, while the NBR is receiving only Tk 100-120 billion from individual taxpayers," says the NBR analysis.
On the other side, there should be at least 600,000 manufacturers, service-providers and businesses under the Value Added Tax (VAT) net. The NBR receives VAT returns from only 40,000-50,000 registered companies, it said.
The revenue board is receiving only Tk 200 to 250 billion as VAT from sales of products while the figure should be Tk 600 to 700 billion. The data were revealed in a working paper of a meeting, held earlier, on partnership between NBR and businesses.
In the paper, the NBR said there is no alternative to increasing tax collection. Despite huge potential, the country's tax-GDP ratio, which is only 10 per cent, is not satisfactory.
The NBR is carrying out different reform initiatives and fostering partnership with the business community. The board already held two partnership dialogues with the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
In the partnership dialogues, the businesses sought environment congenial to paying VAT.
The NBR also urged the chambers and association members to monitor whether their members are giving proper declaration of imports, paying due taxes, submitting tax returns or not, registering for income tax and VAT. They were asked to oust large and medium-business members from the association if they evade tax or don't pay in due time.  
The board also assured of taking punitive action against its officials in case of harassment to the businesses.
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