Despite a surge in the tax identification number (TIN) holders in the country, there is a concerning trend of inadequate return deposits, reports from the National Board of Revenue (NBR) reveal.
According to the NBR, at the end of the deadline for returns submission for the fiscal year 2023-24, only 8.45% of the registered institutions, totaling 24,381, submitted returns, highlighting a glaring gap in tax compliance. Shockingly, over 92% of companies failed to fulfil their tax obligations, reflecting a widespread issue within the business community.
Data from the Registrar of Joint Stock Companies and Firms reveals that out of 288,466 registered public and private limited companies, a staggering 264,085 have not paid taxes, exacerbating the revenue collection challenge faced by the government.
NBR officials attributed this non-compliance to several factors, including dormant businesses, fraudulent practices, and the use of fake addresses by some entities. Furthermore, insufficient manpower within the income tax department has led to delays in taking actions against non-compliant companies.
Despite efforts to increase revenue collection, the NBR has fallen short of its income tax sector target, collecting Tk51,824.44 crore against a target of Tk60,417 crore for the fiscal year 2023-24.
Additionally, a substantial amount of outstanding tax arrears of Tk53,321 crore remained uncollected as of December 2023.
Tax Commissioner of NBR's Large Taxpayer Unit (LTU), Iqbal Bahar, emphasised the importance of timely tax payments for sustainable economic growth and pledged the revenue department's support to businesses willing to comply.
Muhammad Abdul Majid, a former chairman of the revenue board, urged the NBR to conduct research to identify the root causes of non-compliance and implement corrective measures.
Meanwhile, businessmen cited challenges such as the Russia-Ukraine conflict and post-COVID economic disruptions as factors causing a drop in their incomes, which turn caused their failure to submit tax returns.
Besides, complexities in the document submission procedure hindered the tax return submission, said the traders, calling for the introduction of a digital tax return filing system to streamline the process.
Similarly, officials concerned also said that many companies refrain from submitting returns due to decreased incomes and the complexities in the procedure.
Currently, listed companies are subjected to a 20% corporate tax rate, while unlisted companies face a 27.50% tax rate.
Listed banks and financial institutions are taxed at 37.50%, whereas unlisted banks and financial institutions face a 40% tax rate. Merchant banks are taxed at 37.50%, cigarette companies at 45%, and mobile operators at 40%-45%, respectively.
As the government grapples with revenue collection challenges, stakeholders emphasise the urgent need for enhanced tax compliance measures and simplified procedures to ensure sustainable economic devel