Despite the fact that the tax-to-GDP ratio of Bangladesh is 7.5%, which is among the lowest among all the countries in the world, an increasing number of business groups are approaching the National Board of Revenue seeking tax exemption. Tax exemption to some extent and for a certain period is necessary so that businesses can flourish and create new jobs, but a wholesome exemption cannot go on for a long period.
However, the government cannot ignore the fact that most of the local businesses are badly affected by the current global economic gloom and hyper inflation. So, while formulating the tax policy for the upcoming budget, the government has to strike a delicate balance so that neither the state coffer nor the businesses suffer.
There is a growing call for widening the tax net instead of going tough on the existing tax payers. The government has also a stated policy of widening the tax net to increase revenue collection. In fact there is no alternative to collecting more taxes, or bringing more people and businesses under the tax net, for the sake of the country’s development.
Over the last decade our economy has grown substantially thanks to 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 an escape route.
Against this backdrop, the Institute of Chartered Accountants of Bangladesh (ICAB) urged NBR to strengthen unified automation of the tax system, bring the foreign multinational companies under tax net and impose corporate tax on non-resident digital companies and service providers. ICAB gave some proposals to increase tax collection, including digitalisation and integration of tax offices, raising the tax collection areas, justification in source tax realisation, and reducing the expenditure related to the realisation of VAT and other taxes.
We also think that without strengthening NBR’s supervision ability and digitalisation of all the tax-related offices the revenue collection would not increase. Similarly, foreign digital companies like Google and Facebook have been evading taxes for a long time. The authorities, therefore, must find out ways to stop tax evasion and corruption in the tax department for an optimum level of revenue collection.