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Move to curb tax evasion to raise revenue collection


Published : 30 Apr 2022 09:50 PM

Tax exemptions in various sectors, including projects, have become a culture that is hindering the growth of revenue collection. 

The tax ratio of the country's gross domestic product or GDP is very low. 

In such a reality, the National Board of Revenue (NBR) wants to curb tax evasion in development projects. For this, the company is proposing alternatives by changing the existing rules of tax exemption in projects. 

In a recent letter to the top officials of various ministries and departments, NBR chairman Abu Hena Md. Rahmatul Munim said that 'Direct' tax exemption cannot be given in development projects. Instead, the project will have to be implemented by importing the necessary equipment and tools and paying customs duty. 

The amount of duty and tax that will be paid will be refunded later. For this, a separate allocation can be made in the budget every year, added the letter. 

The Board of Revenue further said that the total expenditure should be determined by combining the estimated cost of the project with the amount of duty and tax. 

Now the estimated cost of the project does not add duties and taxes. In most cases, special benefits of tax exemptions are availed through issuance of SRO from NBR. 

At present, tax exemption is given on import of necessary parts and raw materials for the implementation of the project. Apart from this, the salaries, allowances or income of the officers who are hired as consultants are tax free.

The NBR provides tax exemption by issuing an order (SRO) after reviewing the application of the ministry or department implementing the project. 

In a letter to the Cabinet Secretary, Chief Secretary to the Prime Minister and secretaries of various ministries and departments aimed at increasing revenue, the NBR chairman in the letter said, "Basically, tax evasion in various development projects is a big obstacle to improving our position. If this tax is collected, the actual tax-to-GDP ratio will be double the current one. As a result, I firmly believe that it is possible to accelerate the development of Bangladesh to a greater extent."

The Chairman has also said that Bangladesh is going to make the transition from least developed country to developing country. But the tax-to-GDP ratio is still below 10 percent. Tax exemption is one of the obstacles to the non-growth of GDP ratio. Many times, NBR cannot achieve its revenue target due to tax exemption.