NBR to merge large taxpayer units to tighten noose around big evaders
Tuesday, 12 February 2008
Doulot Akter Mala
The revenue board has decided to merge its two main units dealing with the taxation of top companies as part of an International Monetary Fund (IMF) advice to tighten the noose around big tax-evaders, officials said Monday.
The two separate Large Taxpayer Units (LTUs) collecting value added tax (VAT) and income tax will be merged after a decision taken last week and they're expected to operate as a single unit from June this year.
"The board has made the decision to make sure that the big tax payers cannot evade taxes anymore," said a top official of the National Board of Revenue (NBR).
"It's a major policy decision. We're confident that it will increase our tax collections from the top companies, some of which hardly pay any taxes at all," he added.
The two units deal with some 60 per cent of the income tax and VAT the NBR collects every year, according to the NBR statistics.
The decision follows the advice from the International Monetary Fund, which has been consistently critical of the performance of the two large taxpayer units created at its advice some four years back, officials said.
The IMF and the World Bank have said because of the poor tax collection from the big companies the country's revenue income falls short of expectation every year, leading to the poor budget financing by the government.
Bangladesh's tax-GDP ratio is a poor nine per cent, which is the lowest in Asia.
The NBR now needs a formal approval from the finance adviser before starting the unification work, officials said.
The Finance Minister in its budget speech last June hinted at the merger but NBR had to persuade its officials, who had earlier opposed the move, before deciding on the merger.
Officials familiar with the latest move said the creation of a single unit would make it easier to assess a company from all the angles.
"Presently, there is very little coordination between the income tax and the VAT units. A company is assessed differently by the two wings of a same board," said an official.
"But a single unit can easily scrutinise the sales figure and the net annual profit of the same company from different aspects, making it difficult for the company to evade tax," he added.
A member of the board will head the new unit while two commissioners specialized in VAT and income tax would assist him.
The creation of a single unit was earlier opposed by the NBR officials, who thought it would curb their power and lead to reduction of the number of officials.
NBR had initiated a joint auditing of files of both LTUs in 2005, but was forced to stop it after only two months due to non-cooperation from the tax officials.
The revenue board has decided to merge its two main units dealing with the taxation of top companies as part of an International Monetary Fund (IMF) advice to tighten the noose around big tax-evaders, officials said Monday.
The two separate Large Taxpayer Units (LTUs) collecting value added tax (VAT) and income tax will be merged after a decision taken last week and they're expected to operate as a single unit from June this year.
"The board has made the decision to make sure that the big tax payers cannot evade taxes anymore," said a top official of the National Board of Revenue (NBR).
"It's a major policy decision. We're confident that it will increase our tax collections from the top companies, some of which hardly pay any taxes at all," he added.
The two units deal with some 60 per cent of the income tax and VAT the NBR collects every year, according to the NBR statistics.
The decision follows the advice from the International Monetary Fund, which has been consistently critical of the performance of the two large taxpayer units created at its advice some four years back, officials said.
The IMF and the World Bank have said because of the poor tax collection from the big companies the country's revenue income falls short of expectation every year, leading to the poor budget financing by the government.
Bangladesh's tax-GDP ratio is a poor nine per cent, which is the lowest in Asia.
The NBR now needs a formal approval from the finance adviser before starting the unification work, officials said.
The Finance Minister in its budget speech last June hinted at the merger but NBR had to persuade its officials, who had earlier opposed the move, before deciding on the merger.
Officials familiar with the latest move said the creation of a single unit would make it easier to assess a company from all the angles.
"Presently, there is very little coordination between the income tax and the VAT units. A company is assessed differently by the two wings of a same board," said an official.
"But a single unit can easily scrutinise the sales figure and the net annual profit of the same company from different aspects, making it difficult for the company to evade tax," he added.
A member of the board will head the new unit while two commissioners specialized in VAT and income tax would assist him.
The creation of a single unit was earlier opposed by the NBR officials, who thought it would curb their power and lead to reduction of the number of officials.
NBR had initiated a joint auditing of files of both LTUs in 2005, but was forced to stop it after only two months due to non-cooperation from the tax officials.