It may be debatable whether our income tax system is less complicated than other countries. Despite the fact that each country has its unique need and consideration to base its own tax system, a pragmatic assessment invariably will reveal that our tax system is functional. Bangladesh, in fact, has one of the simplest tax systems where the National Board of Revenue (NBR) has been dedicated to "tax simplification" more than ever. Online application and collection of electronic Tax Identification Number (e-TIN) is being made simpler. NBR's portal (http://nbr.gov.bd/) contains menu of eServices with options for e-Filing of tax return and e-Payment of taxes with the objective of making tax payment system much easier. The website of NBR also, inter-alia, contains pertinent tax regulations including the Income Tax Ordinance 1984, Income Tax Rules 1984, finance acts, relevant SROs, and various Forms for submission of tax returns and applications for leniency. Availability of tax related information was never as easy as it is today.
As the income tax fair is now on amid much enthusiasm, we expect more participation of the tax payers. The fair has been making a difference over the years by making us aware of income tax, its necessity with regard to social needs and related social spending (education, health, infrastructure etc) by the government.
Tax is the key reason why so many development projects took place and more are ongoing. Tax revenue helped the government to eradicate poverty, improve literacy rate, medical support and to build roads and bridges for our convenience. With these advantages we are now earning more.
Our direct income tax is a progressive tax system. One-third of NBR's tax revenue comes from income tax with high hopes of more collection in future from this source. A country of about 160 million people has a few millions-- a meager number of individual taxpayers and a handful of large business organisations though the relevant data show the trail of company incorporation number above one hundred and fifty thousand! Tax administration has reasonable hopes of raising tax collection. With that aim, currently each transaction of an organisation is subject to tax test. The organisation making any payment is by law the authorised tax collector of NBR on the amount paid to the recipient in the transaction. Thus, the seller of goods or services is always leaving the share of income tax at source under Chapter VII- Payment of Tax before assessment of the ITO 1984. In particular, for corporate tax assessee, section 30 and its subsections 30(aa), 30(m), and newly inserted 30(o) [Any payment to a person who does not have an e-TIN] brings almost all transactions of a company or organisation under the requirement of tax deduction at source. This mechanism of withholding tax at source has made our tax system simplified to collect tax.
Following withholding tax, both the parties (paying authority and the receiving party) in business are largely tax compliant, and the bi-annual withholding tax returns act as a proof on which basis tax authority can vouch online the paid tax in government accounting and budgeting system. For the gravity of the matter, any non-compliance in this regard of tax at source including on executives' and foreign employees' salaries can aggravate the tax burden of the entity. On the contrary, an individual tax assessee is not required to collect tax when making any payment to any party. However, his/her income may be subject to tax at source if the payment is made by the paying authority as a corporate entity or an organisation with an e-TIN. Since the paying authority will not process the payment at its peril without obtaining the receiving party's e-TIN information, e-TIN is going to be universal for all citizens of Bangladesh in due course.
So, as a blanket rule, a person holding an e-TIN under sections 184A, 184AA (Requirement of twelve-digit Taxpayer's Identification Number) is required to submit his/her Return of income under section 75 of the Income Tax Ordinance 1984. As such, we all are under tax net by default whether we realised it or not. Moreover, the prescribed income tax Return Forms for both individual and corporate assesses are designed to inspire us to supply information to NBR in a coordinated manner to base wealth of individual tax assessees for collection of surcharge-- a kind of wealth tax. Planned integration of banking system will surely aid the NBR to collate the requested information.
The tax administration of Bangladesh has been doing its best to render payment of tax user-friendly. It is difficult to accept the idea that our hard-earned income will have to be shared. It is understandable. But, who are we sharing it with? Well, we are sharing it with the state which in the first place helped us grow to the state of income earning position. Therefore, in spite of the pain, if any, we have to accept the rules of taxation as evolved over time on the principle of justice and fairness. Literally, taxation is more of a social issue than a technical matter. Without taxes, the society has no common destiny, and collective action is impossible. This has always been true. At the heart of every major upheaval of a country lies a fiscal revolution. We are proud to be a part of it. Wishing the income tax fair 2017 a grand success!
The writer is a business & tax analyst. [email protected]
