Call to enforce transfer price rules

Taxmen and accountants at a workshop Saturday laid emphasis on proper enforcement of transfer pricing provisions to keep multinational corporations from dodging taxes.

Transfer pricing means setting the price of goods or services transacted between two affiliated entities in separate countries within the same group. In such transactions, there is scope to fix the prices, especially to avoid tax in the countries, where the rate is high.

In 2012, Bangladesh incorporated transfer pricing provisions in the income tax law, which became effective last year.

The speakers also called for having proper knowledge and expertise of the officials to thoroughly analyse such pricing documents to detect if any wrong happened with it.

The views came at a daylong workshop on "Transfer Pricing," organised by the Institute of Cost and Management Accountants of Bangladesh (ICMAB) at its head office in the city.

Chairman of the National Board of Revenue (NBR) Md Nojibur Rahman was the chief guest at the inaugural session, with ICMAB president Abu Sayed Md. Shaykhul Islam in the chair.

Globally, about 60 per cent of transactions are executed among members of group of companies or affiliated entities, said Md Shabbir Ahmed, joint director of central intelligence cell (CIC) and transfer pricing coordinator of NBR, in his technical paper.

He said "Transfer mispricing is a serious concern for tax agencies," because it causes loss in revenue to the government.

"Transfer pricing is very important for the NBR and even globally," the NBR boss said.

He also underlined the need for maintaining integrity and professionalism and assured the ICMAB of considering its plea for building a strategic partnership between the two organisations in enhancing the volume of overall tax collection.

Mr Rahman said that the Prime Minister and the Finance Minister have instructed him to prepare the budget document as a pro-people, pro-farmer and pro-business one.

ICMAB president requested the NBR to revise relevant provisions allowing the institute's members, along with the chartered accountants (CAs), to certify the TP statements.

"Currently, only the CAs are allowed to do so," he told the FE, adding that certification of TP statement is mandatory as per the relevant provisions.

He also assured the tax authority of providing all out cooperation, including ICMAB's human resources, to discharge the board's functions.

Former NBR member Md Aminur Rahman also presented a technical paper jointly with Mr Shabbir Ahmed at the workshop.

Former president of ICMAB Mohammed Salim, and its secretary and first secretary (tax) of NBR Md. Abdur Rahman Khan, a number of high officials of the revenue board attended the inaugural session, where Nikhil Chandra Shil presented a brief presentation on "Role of CMAs in Transfer Pricing."

At present, about 75 courtiers adopted the TP regime. In South Asia, India and Sri Lanka made transfer pricing regulation in 2001 and 2008 respectively.

Citing the importance of TP provisions, Mr Ahmed said that the tax agencies, under the conventional tax law, are not legally empowered to scrutinise the mispricing of transactions.

The general means of transfer mispricing include overstating import value, charging for intellectual or intangible property and sharing common cost and interest expense, among other issues.

Nearly 200 officials including its members, senior officials of NBR and different other public and private organisations participated in the workshop.

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