The IFC survey on tax compliance

The state of tax compliance by individuals as well as business firms in Bangladesh presents an uncomfortable picture. A variety of factors are responsible for this situation. Admittedly, some progress has been achieved in recent years concerning tax:GDP (gross domestic product) ratio but many things do still remain unaccomplished. Given the extent of expansion of the economy, the improvement that has so far been witnessed, falls short of the desired level. Some of the reasons for the slow progress in raising the level of tax compliance are very much known to the people concerned. But there are a few reasons that are yet to be fully explored. The International Finance Corporation (IFC), the private sector lending arm of the World Bank (WB) group, has taken the trouble of identifying, in a clear perspective, the causes that are held responsible for tax avoidance by both formal and informal firms through a survey, styled, 'Bangladesh Survey Report on Tax Compliance Costs of the Formal Sector and Perception of Taxation by the Informal Sector'. The National Board of Revenue (NBR) unveiled the findings of the survey last week.
The survey has brought to the fore many known factors that are inhibiting the growth of tax revenues and discouraging people and business firms from paying taxes. One special feature of the survey is that it has sought to know from the business firms about their perception of the NBR, taxmen and the latter's level of honesty and integrity. The survey, which had covered 1,000 formal and 800 informal business firms in Dhaka and Chittagong, has listed the lengthy procedures, higher costs and unofficial payments to taxmen as major barriers to bringing more and more businesses under the tax net. The survey has found the time that is usually needed for complying with the tax payment procedures or resolving the tax disputes, to be unnecessarily lengthy. The disconcerting aspect about the findings of the IFC survey relates to the business firms' perception of the taxmen. The business firms in the informal sector have alleged that the compliance cost is more than what is involved in tax dodging because of the unofficial payments they are required to make to the tax officials.
The IFC survey did not end its job only by trying to know the minds of the existing and potential tax-paying firms. It sought to know from the firms, operating in both formal and informal sectors, the solutions to the difficulties facing them while making tax payments or following other tax-related procedures. What the firms, covered by the survey, wanted was a 'clearer' picture of their legal obligations, procedures and straightforward answers to their tax-accounting questions. On this aspect, the IFC survey has recommended for the taxmen to improve the level of their communication with the taxpayers, with the objective of disseminating information about all tax procedures and rights and obligations of the latter.  
Besides, the survey also reveals a few pieces of information that might prove handy to the NBR people to rope in more business firms. However, it is just not information, data and statistics of different sorts that would help the NBR to achieve its goals as far as the mobilisation of higher tax revenue is concerned. What is required most is the pro-active and sincere move on the part of taxmen to fulfil the objectives. The question here is all about their readiness to accomplish their avowed tasks and help elevate the state of tax compliance at the levels of both individuals and business entities.