Taxmen worried over PCBs\\\' declining profit

Decline in operating profits of private commercial banks (PCBs) in 2013 has made the tax authorities worried against the backdrop of the significant fall in collection of corporate tax in the second half of the current fiscal year (FY).
Around 63 per cent of the corporate tax, collected by the Large Taxpayers Unit (LTU), comes from the PCBs as they pay 42.5 per cent tax on their income.
Majority of the large taxpayers incurred loss in their businesses in 2013, according to available sources.
Tax officials have already seen a fall in corporate tax collection from large businesses due to the ongoing political impasse.
The aggregate collection of income tax faced some 26 billion in shortfall in July-December period.
Of the shortfall, the LTU alone has faced Tk 10 billion in deficit against its target.
Due to political instability, the LTU faced Tk 3.0 billion shortfall in December against its target. The wing collected Tk 9.0 billion against its target of Tk 12.52 billion in December.
The target for FY 2013-`14 has been fixed at Tk 151.75 billion from the LTU.
A senior tax official said it would be quite challenging to achieve the current fiscal year's target as taxmen are in doubt about collection of the revenue equivalent to the last year's.
"Islami Bank and Grameenphone (GP) are two major taxpayers of the LTU. Tax collection from both the large companies might go down this year," the official said.
Islami Bank's operating profit declined in 2013, while Grameenphone's revenue and income might also see a decline, he said.
"LTU's tax collection from GP was higher as the company used to invest here from their mother-company, but the company has started re-investing their local profits," he said.
Decline in import and export also has affected the tax collection of Chittagong tax offices. It affected the income of life insurance companies. Nobody is now interested in new policies due to the sluggish business trend, officials said.
"Banks have huge amounts of idle money as there is no investment," they added.
Economic slowdown due to political turmoil affected the revenue earnings of LTU
both in the first and the second quarter of the current fiscal year. In the July-September period, it missed the target by Tk 1.37 billion, while in October-December the shortfall widened by nearly Tk 8.0 billion.
However, the wing achieved 22 per cent and 12 per cent growth over the tax collected in the first and the second quarters respectively of the last corresponding period.
Total target for the LTU has been set at Tk 151.75 billion for the current fiscal year, with an expectation of 24 per cent growth over the last corresponding period. Last year, the wing collected Tk 117.05 billion income tax.
Officials said the second quarter would be more challenging for them in achieving the target as political instability had hit the large businesses' income in the last three months.
Time for submission of tax return by some 50 corporate taxpayers' local manufacturing companies expired on December 31. Banks and financial institutions submit their annual tax return on July 15. However, large companies pay advance tax quarterly on their earnings.
The aggregate target for National Board of Revenue (NBR) has been set at Tk 1.36 trillion for FY 2013-14, which, according to the taxmen, is quite impossible to accomplish under the present situation.