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The Financial Express

Banking law deters taxmen from accessing depositors' data

| Updated: March 23, 2021 16:26:39


Banking law deters taxmen from accessing depositors' data

The Banking Secrecy Act is preventing taxmen from obtaining depositors' data by establishing connectivity with the lenders, the head of the revenue board said.

Speaking at a pre-budget discussion on Wednesday, Abu Hena Md Rahmatul Muneem said, the revenue officials can seek data of bank depositors on a case-by-case basis as per the income tax ordinance, not in a blanket manner.

"It is not possible to establish connectivity with the banks to obtain information from all clients as banks have to maintain secrecy of their customers," he said.

He made the remarks in response to a proposal of the PwC Bangladesh to scrutinise the income of the bank depositors beyond their deposits with the banks.

The National Board of Revenue (NBR) held the pre-budget meeting with the representatives of the PriceWaterhouseCoopers (PwC) and Center for Policy Dialogue (CPD) in Dhaka.

The NBR chairman said they have an integrated system to see the investments of savings certificates of investors.

"We've initiated a move to integrate information of the owners of cars and house properties with the tax departments whether they are showing those in the tax returns," he said.

The revenue board would establish connectivity with the departments concerned to track them and it will collect holding numbers from city corporations to expand the tax net, he added.

The NBR also formed a committee comprising VAT and income tax officials to bring the digital economy under tax net as the country is still lagging behind in this field, he said.

However, the tax officials will make a cautious move in this regard without affecting growth of the e-platform, he added.

Managing partner of PwC Bangladesh Mamun Rashid said the bank depositors are getting relief paying tax deducted at source on their interest income and it is easy for the taxmen to realise the levy.

The entire income of a people remained unknown to the taxmen and collect tax on the same, he added.

He laid emphasis on intensifying the enforcement of Transfer Pricing (TP) law to tap its potential by collecting a significant amount of revenue.

"Our clients found that the NBR is not that much serious about enforcing the TP law," he said.

The TP law could be overhauled or revised to make it enforceable, Mr Rashid added.

Mr Rashid sought 'tax neutral models' to facilitate merger and acquisition of companies in Bangladesh following its increased trend.

PwC director Kapil Basu said the allowable tax-free limit of promotional expenses is 15 to 20 per cent of a company's turnover as per world-wide practices.

He said the effective tax rate of a company goes up to 100 per cent due to lower tax-free limit of promotional expenses.

Mr Basu proposed to simply the process of obtaining electronic taxpayers identification number (TIN) by foreign companies to help them submit returns.

Yamen Jahangeer, director of tax and regulatory services, recommended the NBR include goodwill and patent amortisation in the tax law to encourage Merger and Acquisition.

Associate manager of PwC MD Shahadat Hossain said non-resident companies such as Google, Amazon are facing difficulties to be tax-complaint in Bangladesh due to the complex process.

He also proposed to introduce advance ruling in valuation and allow a company to submit single return if they have different wings in a single name.

Customs member Syed Golam Kibria said it is difficult to introduce advance ruling for valuation as it fluctuates often.

CPD senior research associate Muntaseer Kamal said the NBR needs to devise a medium-term plan to offset COVID-induced revenue losses.

He proposed to introduce e-TDS, expedite Electronic Fiscal Device (EFD) distribution and implementation of new direct tax and customs law.

He also proposed to introduce property tax in line with the inheritance tax of other countries and also introduce pollution tax in the upcoming budget.

Responding to the proposal, the NBR chairman said, the process of framing housing taxes has to be determined cautiously as many properties are not generating income.

He said the revenue collection target for NBR is 50 per cent higher this year compared with that of the actual earning previous year.

He suggested fixing a realistic target for the NBR in the budget, which is achievable.

Another senior research associate of CPD Syed Yusuf Saadat said Bangladesh would come out from the non-reciprocal trade benefit after graduation from the least developed country (LDC) status as it has to give some trade benefit to other countries too.

"The country's import tax revenue may go down for this. Still we have five years to get prepared for finding a way out of how it could offset the import revenue loss," he added.

Income tax member Md Alamgir Hossain and VAT member Masud Sadiq also spoke at the programme.

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