Trickery in taxing foreign artistes\\\' pay under scrutiny

The issue of deducting tax from payments made to foreign artistes by local organisers is under scrutiny of the government as there have been allegations of evasion.      
The finance minister took up the matter following a request coming from the Cultural Ministry on the fixation of a maximum ceiling of tax to be paid by the foreign performers.
There was a proposal to fix Tk 350,000 as the maximum amount of tax deductable at source from the honoraria of foreign artistes, hired by various local organisations from time to time.    
Officials said tax officials found it difficult to fix such a ceiling under the existing the income-tax law.
To discuss the matter, Finance Minister AMA Muhith held an inter-ministerial meeting Wednesday with the NBR, National Security Intelligence (NSI) and the Ministry of Cultural Affairs, sources said.
The tax authority, as per income tax law, collects 30 per cent tax at source from the honoraria of the foreign artistes hired for commercial shows.
However, no tax is levied if public fund is involved on hiring any foreign music, dance performers and other fine art artistes.
Under the Double Taxation Avoidance Agreement (DTA) the honorariums of foreign artistes are taxable.  
"The National Board of Revenue (NBR) explained details on legal bindings on collection of taxes on the basis of income of the foreign artistes in a summary to the Finance Minister," said a senior tax official.
Trend of hiring foreign artistes has been on the rise by companies and individuals in recent years.
Local organisers have to take 'no objection' certificates from the NBR prior to brining the foreign artistes.
Tax officials have found the proposal to fix a tax ceiling as 'unjustified' as different artistes receive different amounts of honorarium on the basis of their popularity.
They noted tax payment by foreign artistes as "insignificant" compared to the volume of their honorarium and frequency of visiting Bangladesh on special invitation.
Earlier, Cultural Affairs Minister Asaduzzaman Noor had made a proposal to the revenue board for fixing the maximum tax ceiling.
Officials said in many cases local organisers claim they would not pay any honorarium to foreign performers, showing various reasons, like terming the programme charitable.
They said the NSI identified some cases where local organisers had evaded taxes by showing less or no honorarium paid to the foreign artistes.
Sources in cultural circles have noticed an upturn in inviting foreign artistes, especially from neigbouring India, has increased significantly in recent years.
They perform on different occasions at posh hotels, restaurants, different corporate, fashion, media and production houses-and even at family functions like wedding ceremony, birthday party or anniversary celebrations.
The NBR launched an investigation after Bollywood superstar Shahrukh Khan came to a concert in the country in 2010. They found the local organisers having shown Tk 5.0 million as honorarium paid to Shakrukh Khan, which seems abnormally low compared to his charges in overseas programmes.
Also, taxmen found several events where local organisers only obtained permission of cultural affairs ministry bypassing the tax authority.
Following the cases, the Home Ministry and the NBR investigated the matter.
Although the tax authority beefed up its effort to ensure proper tax collection from foreign artistes, the amount of tax collected last year stood at a paltry Tk 10 million.
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