Monday, 28 November, 2022

Plug loopholes to check tax evasion

An agency report published in yesterday’s Daily Sun informs that the government is losing out on huge amount of revenue collection due to widespread tax evasion and rampant corruption in the NBR. According to the report, a total of 2.6 million people or 52.41% of the taxpayers did not submit their income tax returns in the last fiscal year. Despite registering for VAT, around 22% of companies are not submitting their VAT returns, even though the companies are taking VAT for products or services from customers.

The dismal picture of tax collection is also manifested in the fact that Bangladesh has the lowest tax-GDP ratio in the South Asia and one of the lowest in the world. Global lenders including IMF have been repeatedly calling for reform in the country’s revenue sector in a way that the tax ratio in the GDP would grow as per the volume of the economy. Unfortunately, it didn’t happen so far.

The government has a clear policy of widening tax net to increase revenue collection. There is no alternative to collecting more taxes, or bringing more people and businesses under tax net, for the sake of the country’s development.

Over the last decade our economy has been going from strength to strength thanks the government’s pro-development policies. Both public and private investments have increased. As a result the people’s living standard has improved. Companies are doing hefty business and a growing number of people are living a luxurious life. But when it comes to paying tax, many look for escape route.

Big corporations are finding a reliable recourse in the logjam of litigations in the courts and Appellate Tribunal of NBR to further delay paying tax arrears. It has been observed that when NBR finds out instances of tax evasion by big businesses and demands the due taxes be paid, many of the companies file one after another cases against the NBR’s claim. And this is how shrewd companies are thriving on tax avoidance by taking advantage of the lacunas in the tax laws. Capitalizing on this legal leeway, the companies keep the cases drag on year after.

The authorities concerned, therefore, must find out ways to stop the legal loopholes and strengthen NBR for an optimum level of revenue collection.