The National Board of Revenue (NBR) freezes bank accounts of as many as 40 privet universities due to non-payment of income taxes.
The NBR has taken the action as part of its move to collect 15 percent income taxes from the private universities.
However, Association of Private Universities of Bangladesh (APUB) claimed that the NBR went into its action despite the issue is still pending in the appellate division of the Supreme Court.
Sources said the process of freezing private universities’ bank accounts started last week. The process began when the NBR issued a letter of closure to the banks and then the banks promptly sent a letter to the university authorities. The series of events went so fast that the university authorities could not comply with them accordingly. Consecutively, the course of action went against the university authorities, further resulting in the closure of the bank accounts.
In a press release issued on Sunday, APUB expressed concern over the premature freezing of university accounts by the NBR, stating that the institutions were not given the opportunity to address their tax obligations following the court’s decision.
According to a published news report, the Appellate Division’s ruling, issued on February 27, mandated a 15% tax on all private universities. This decision followed
a legal battle initiated by the government to enforce taxation on these institutions.
Attorney General Amin Uddin clarified that the tax burden falls on the university authorities, not the students, and applies to profits after salary payments. However, private university owners are deliberating on how to manage this financial obligation, including the possibility of passing some costs onto students.
Previously, the High Court had deemed the tax imposition on private universities unlawful in 2016. According to the Private University Act, private universities are not profitable organisations and are operable under a trust. So that no tax would be imposed on the private university authorities. However, following a government appeal, the Appellate Division overturned this decision on February 9, 2021, leading to the current tax enforcement.
The NBR’s actions have raised concerns within the private university sector, particularly regarding the timing of the account freezes just before Eid-ul-Fitr, a significant religious festival for Muslims. At least 35,000 teachers and employees are uncertain about their salaries and Eid bonuses. APUB has called for the NBR to reconsider its approach and urged for a resolution of legal complexities before tax collection proceeds.
APUB Director Belal Ahmed told the Bangladesh Post that there is a legal conversation and counter conversations underway. The Appellate Division has yet to make any written order on tax collection. So it is not the proper way for a government body to force and freeze the accounts.
The situation underscores ongoing challenges in the taxation framework governing private educational institutions, with stakeholders dealing with legal rulings and their financial implications.