Unchanged number, pending cases remain LTU challenges

The collection target for Large Taxpayer Unit (LTU) will be challenging as the number of taxpayers under the unit has remained unchanged along with cases remaining pending and dull performance in the banking sector..
The unit will have to intensify its monitoring on large taxpayers to achieve 35. 71 per cent revenue growth over the corresponding period, said the taxmen.
National Board of Revenue (NBR) has set Tk 197.80 billion as collection target for LTU in the current fiscal year against Tk 145.75 billion collected in the last fiscal year.
Around 1,065 large taxpayers currently pay taxes under the LTU. Of them, 353 are companies and the rest are individuals, official data said.
All of the private commercial banks pay tax under LTU at the income-tax wing. Cell phone and cigarette companies are the second-largest source of revenue earning for the unit.
The LTU collects some 48 per cent of its total revenue from private commercial banks.
In the January-June 2015 period, however, a good number of large banks showed a sluggish growth in operating profit due to lower credit demand and a downtrend in interest rates on lending, according to available data in the banking sources.
Some banks with comparatively lower capital base earned higher profit in that period.
In the current budget for FY2015-16, the government has cut corporate tax rates for listed commercial banks by 2.5 per cent to 40 per cent.
However, it slapped 3.0 per cent source tax on cigarette companies and scrapped tax-benefit for listed cigarette companies to offset the loss to be incurred on account of the cut in tax on listed banks.
A senior tax official pointed out that enforcement of the new measure has been stayed by the High Court for three months following a writ petition filed by a cigarette company challenging the provision.
"Collection of tax at source would not be possible unless the verdict comes in favour of LTU," he said about the immediate problem facing the tax-collectors.
LTU's tax-collection projection from Bangladesh Telecommunications Regulatory Commission (BTRC) also has faced a blow since last year.
The unit has yet to collect major part of taxes from the Commission due to dispute with the taxmen over the tax measure on it, he said.   
Humayun Kabir, FCA, income-tax subcommittee convener of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said the target is challenging, but attainable.
"The banks have cut rates of interest on deposits by nearly 4.0 per cent. The lending rates have declined but well below that on deposits," Mr Kabir said.
Profit margins for banks will remain high as interest expense would decline with the cuts in lending rates, he added in his calculations.
On the other side, he further said, provision for bad loans from commercial banks is not allowable expense in the income-tax law-it is taxable.
"There is no reason to get frustrated, but it would be a challenge for the LTU."
LTU started its journey in 2003 with 1,005 large taxpayers. Its number of taxpayers increased following the launch of new commercial banks, non-banking financial institutions and insurance companies.
Taxmen said the NBR is going to increase the number of large companies on the LTU tax net through conducting intensive monitoring and expanding its tax base.
Some 45 large companies under seven large groups are likely to come under LTU Chittagong wing.
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