Tax men plead for money-whitening provision in budget for next fiscal******
Sunday, 15 May 2011
Doulot Akter Mala
Income tax officials of the revenue board and its field offices have proposed to the government to create necessary provision in the next budget for disclosing undeclared money to bring shadow economy under formal channel. According to a World Bank study in 2010, size of shadow economy is equivalent to 35.9 per cent of formal economy in Bangladesh which is 23.9 per cent in India. The tax officials have recommended to the government to offer the facility only for the upcoming fiscal and not to allow the same within next five years. The Bangladesh Civil Service (taxation) association, comprising all the income tax officials of the National Board of Revenue (NBR), proposed this measure for upcoming budget at a recent internal brainstorming session of taxmen. The association has recommended some major income tax measures for next fiscal, based on suggestions received from all field-level tax offices, top revenue officials and experts. The tax association maintained that the government would be able to collect Tk 80 billion in additional revenue if it could include the measures suggested by it in the income tax law. The association said people will be encouraged to evade tax if the government gives the opportunity frequently. "A large amount of undisclosed money is invested in real estate, car and banks. The money, invested in productive sector, could be shown in the tax files with payment of a specific amount of tax," it said. The rate of tax should be fixed rationally to ensure justice for regular and honest tax payers, it added. There should be strict punitive measures against those who will not avail the facility, the association added. On property tax, the taxmen proposed imposition of tax or surcharge at progressive rates. Property worth below Tk 10 million could be considered for exemption from property tax while it could be slapped at 10 per cent for income above Tk 10 million to below Tk 50 million, 15 per cent for above Tk 50 million to below Tk 200 million and 20 per cent for Tk 250 million and above. The taxation association also proposed imposition of tax on share traders of secondary market, irrespective of loss or profit. All types of taxpayers, both individual and corporate, could be brought under tax net by imposing 3.0 per cent presumptive tax on sale value of share which will be traded in the secondary market. The tax paid on the share trading should be considered as 'final settlement', the proposal said. For stock exchange members tax rates could be increased to 1.0 per cent from existing 0.05 per cent for secondary share, debenture, bond or mutual fund trading. Taxmen urged the government to slap a "minimum alternative tax" at 3.0 per cent or Tk 50,000 which is higher, on turnover of loss-making companies. To check tax evasion in real estate sector, income taxmen proposed a specific tax rate on turnover of real estate business. The taxmen proposed the government to raise base-penalty to 25 per cent for concealment of income and fix it at 10 per cent for each of the previous years. They also recommended to the government to give special power of magistrate to some officers of the NBR. The taxmen proposed to the government to keep a provision for outsourcing to help tax officials in respect of investigation, inspection or information and communication technology. To reduce scope for tax evasion, the income tax officials preferred imposition of a tax on value of cars purchased by company directors in the name of companies. "Some company directors are purchasing luxury and expensive cars for personal use from company accounts. The earning of the company is informally transferred to the company directors. They are also avoiding tax on perquisite in this way," the proposal said. For company taxpayers, the government should not allow capital expenditure above Tk 3.0 million or 10 per cent of the paid up capital in case of purchase of cars. If shareholder directors use the car regulary, purchased from company accounts, than the perquisite on use of cars will be calculated on the basis of value of the car. They proposed 7.5 per cent perquisite of actual salary if value of car stands at Tk 3.0 million while 25 per cent for above Tk 3.0 million to 5.0 million, 50 per cent for above Tk 5.0 million to Tk 10 million and 100 per cent for above Tk 10 million. Perquisite will be calculated for every car in case of use of more than one. The income taxmen proposed to raise the tax rates of fisheries, poultry, dairy farm and other agriculture farms in a bid to check fund transfer to this sector from other companies for enjoying its lower tax rates. They have proposed tax at 10 per cent rate for individuals and 15 per cent for corporate taxpayers in this business. Taxmen also proposed to slap 15 per cent tax on export cash subsidy, 2.0 per cent on commission of freight forwarding business and fix those as final tax liability. The income tax officials also proposed to cut tax on savings certificates to 5.0 per cent from existing 10 per cent in a bid to help small savers. The association recommended mandatory rule for submission of Taxpayers Identification Number (TIN) in obtaining approval for building design and all bill of entries. Tax officials also recommended protective measures to check tax evasion by corporate taxpayers. They suggested to the government to slap 25 per cent tax on company directors in addition to his salaries like different commissions or service expenditures. To check tax evasion through inter-company and inter-business transaction, the taxmen proposed to keep a mandatory rule of conducting all financial transaction through banking channel. Talking to the FE Saturday, a top tax official said they have prepared the recommendations following their experiences in the field level on collection of taxes from the companies. "Almost 90 per cent of the public limited companies evade tax by showing loss over the years. There should be tax measures to ensure their accountability to the state," he said. He said the taxmen have proposed to the government to take those measures to boost revenue collection by checking widespread evasion.
Income tax officials of the revenue board and its field offices have proposed to the government to create necessary provision in the next budget for disclosing undeclared money to bring shadow economy under formal channel. According to a World Bank study in 2010, size of shadow economy is equivalent to 35.9 per cent of formal economy in Bangladesh which is 23.9 per cent in India. The tax officials have recommended to the government to offer the facility only for the upcoming fiscal and not to allow the same within next five years. The Bangladesh Civil Service (taxation) association, comprising all the income tax officials of the National Board of Revenue (NBR), proposed this measure for upcoming budget at a recent internal brainstorming session of taxmen. The association has recommended some major income tax measures for next fiscal, based on suggestions received from all field-level tax offices, top revenue officials and experts. The tax association maintained that the government would be able to collect Tk 80 billion in additional revenue if it could include the measures suggested by it in the income tax law. The association said people will be encouraged to evade tax if the government gives the opportunity frequently. "A large amount of undisclosed money is invested in real estate, car and banks. The money, invested in productive sector, could be shown in the tax files with payment of a specific amount of tax," it said. The rate of tax should be fixed rationally to ensure justice for regular and honest tax payers, it added. There should be strict punitive measures against those who will not avail the facility, the association added. On property tax, the taxmen proposed imposition of tax or surcharge at progressive rates. Property worth below Tk 10 million could be considered for exemption from property tax while it could be slapped at 10 per cent for income above Tk 10 million to below Tk 50 million, 15 per cent for above Tk 50 million to below Tk 200 million and 20 per cent for Tk 250 million and above. The taxation association also proposed imposition of tax on share traders of secondary market, irrespective of loss or profit. All types of taxpayers, both individual and corporate, could be brought under tax net by imposing 3.0 per cent presumptive tax on sale value of share which will be traded in the secondary market. The tax paid on the share trading should be considered as 'final settlement', the proposal said. For stock exchange members tax rates could be increased to 1.0 per cent from existing 0.05 per cent for secondary share, debenture, bond or mutual fund trading. Taxmen urged the government to slap a "minimum alternative tax" at 3.0 per cent or Tk 50,000 which is higher, on turnover of loss-making companies. To check tax evasion in real estate sector, income taxmen proposed a specific tax rate on turnover of real estate business. The taxmen proposed the government to raise base-penalty to 25 per cent for concealment of income and fix it at 10 per cent for each of the previous years. They also recommended to the government to give special power of magistrate to some officers of the NBR. The taxmen proposed to the government to keep a provision for outsourcing to help tax officials in respect of investigation, inspection or information and communication technology. To reduce scope for tax evasion, the income tax officials preferred imposition of a tax on value of cars purchased by company directors in the name of companies. "Some company directors are purchasing luxury and expensive cars for personal use from company accounts. The earning of the company is informally transferred to the company directors. They are also avoiding tax on perquisite in this way," the proposal said. For company taxpayers, the government should not allow capital expenditure above Tk 3.0 million or 10 per cent of the paid up capital in case of purchase of cars. If shareholder directors use the car regulary, purchased from company accounts, than the perquisite on use of cars will be calculated on the basis of value of the car. They proposed 7.5 per cent perquisite of actual salary if value of car stands at Tk 3.0 million while 25 per cent for above Tk 3.0 million to 5.0 million, 50 per cent for above Tk 5.0 million to Tk 10 million and 100 per cent for above Tk 10 million. Perquisite will be calculated for every car in case of use of more than one. The income taxmen proposed to raise the tax rates of fisheries, poultry, dairy farm and other agriculture farms in a bid to check fund transfer to this sector from other companies for enjoying its lower tax rates. They have proposed tax at 10 per cent rate for individuals and 15 per cent for corporate taxpayers in this business. Taxmen also proposed to slap 15 per cent tax on export cash subsidy, 2.0 per cent on commission of freight forwarding business and fix those as final tax liability. The income tax officials also proposed to cut tax on savings certificates to 5.0 per cent from existing 10 per cent in a bid to help small savers. The association recommended mandatory rule for submission of Taxpayers Identification Number (TIN) in obtaining approval for building design and all bill of entries. Tax officials also recommended protective measures to check tax evasion by corporate taxpayers. They suggested to the government to slap 25 per cent tax on company directors in addition to his salaries like different commissions or service expenditures. To check tax evasion through inter-company and inter-business transaction, the taxmen proposed to keep a mandatory rule of conducting all financial transaction through banking channel. Talking to the FE Saturday, a top tax official said they have prepared the recommendations following their experiences in the field level on collection of taxes from the companies. "Almost 90 per cent of the public limited companies evade tax by showing loss over the years. There should be tax measures to ensure their accountability to the state," he said. He said the taxmen have proposed to the government to take those measures to boost revenue collection by checking widespread evasion.