Foreign investors on Wednesday recommended introducing an eTIN-based tracking system of bank accounts to prevent evasion and increase tax collection.
The idea is that the central bank will put in place the system which the revenue authority would utilise to do necessary analysis in this regard.
The Foreign Investors' Chamber of Commerce and Industry (FICCI) placed the proposal at a pre-budget meeting of the National Board of Revenue (NBR) at the NBR headquarters in the city's Segunbagicha.
Presided over by NBR chairman Abu Hena Md. Rahmatul Muneem, NBR members Md Masud Sadiq, Zakia Sultana and Md Shamsuddin Ahmed also addressed the programme.
FICCI President Naser Ezaz Bijoy, Vice President Neil Coupland, Executive Director T I M Nurul Kabir, Members Zaved Akhtar and Sazzad Chowdhury took part in the discussion while Consultant Snehasish Barua made a presentation on the chamber's budget proposals for FY 2022-23.
In its proposal, FICCI said that currently the customer-wise deposit information is not compiled by any regulatory authority while the banks collect tax deducted at source (TDS) at 10 per cent (accounts with TIN) and 15 per cent (without TIN) rates as per the Income-tax Ordinance, 1984.
Some assessees may not declare all the bank accounts with the intention to evade taxes, so the Bangladesh Bank (BB) could ask each bank to provide eTIN-wise account numbers through an automated system, it said.
Then the NBR can reconcile the taxpayers' declaration of bank accounts from the database of the central bank to ensure completeness of reporting on tax returns by an assessee, said Mr Barua in his presentation.
Mr Bijoy, also the chief executive officer (CEO) of Standard Chartered Bank, proposed to formalise adoption of mobile financial service (MFS) and agent banking as modes of collection or payment in all tax laws.
He noted that money transferred through MFS rose 40.50 per cent year-on-year to Tk 629.93 billion in June, 2021.
In this regard, discussion with the central bank is required to reduce transaction costs to encourage businesses adopting digital services like MFS and agent banking, he said.
Currently, the government spends around US$ 0.5 billion to manage the cash-based transactions in the country, he noted.
Proposing rationalisation of TDS and treaty ratification, the FICCI president said that although the corporate tax is reduced to 30 per cent, the TDS is considered as the minimum tax which increases the cost of doing business.
Therefore, the businesses are unable to reap benefits of reduced corporate tax, he said, adding that the impact of minimum tax against TDS should be rationalised based on industry-specific requirement while document verification system (DVS) can be used in this regard to identify income and expenses of companies.
To encourage TDS compliance and widening the tax net, corporate tax rate for compliant companies could be reduced by 10 per cent of their tax liability, the FICCI proposed.
The chamber also suggested the government review land valuation and rationalisation of tax as the current mouza (administrative district) based value of land is substantially lower than the market price.
Besides, the registration cost and other taxes are about 10 per cent which creates motivation for non-compliant taxpayer to under-report sales value of property.
Concluding the meeting, the NBR Chairman said the revenue authority has been working to create a taxation-friendly environment for businesses, and therefore, the budget proposals by the associations like FICCI will be gravely considered.
Responding to a comment, Mr Muneem said, "It is heard very often that the NBR milks the same cow again and again ... but what can we do if there is no alternative for us."
However, he expressed that the country is on its way to gradually create more scopes of tax collection with the economic developments.
It is really hard to frame a balanced tax policy that satisfies all stakeholders, he said, adding: "Have faith in us, we are trying to expand the tax net to achieve the sustainable growth targets, and tackling the challenges regarding LDC graduation."
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