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Bangladesh - Corporate - May 7, 2023

NBR to hire agent to increase revenue

Staff Correspondent: The National Board of Revenue (NBR) is planning to appoint ‘agents’ to raise revenue. These agents will locate taxpayers with taxable income and TIN (Taxpayer Identification Number) in remote areas of the country. It will also encourage and assist them to submit their returns.
In return a portion of the tax payable by the taxpayer will be given to the agent as commission. For this purpose, a rule called ‘Tax Return Preparer’ (Income Tax Return Preparer or TRP) is being formulated in the budget. Several responsible sources of the Ministry of Finance and NBR have confirmed the truth of this information.
Sources said agencies are appointed to assist taxpayers in developed countries like the US, who help in finding new taxpayers and filing their returns in return for a commission from the central revenue collection agency. In this case the agent is appointed first. Under those agents, educated youth are given tax related training. Later they help young new taxpayers to fill their returns.
Bangladesh is also thinking of appointing agents following that model. The new rules have been drafted for this purpose. There is a budget meeting of NBR senior officials with the Prime Minister on May 14. If the Prime Minister gives his positive consent to the rules in the meeting, it will be included in the Finance Bill.
Sources also said that as per the eligibility criteria provided in the rules, the interested companies will have to apply to NBR for enrollment as agents. NBR will enter into an agreement with the eligible institution after the application is scrutinized. All returns prepared by them have to be submitted online under section 74 of the Income Tax Ordinance. In return, the agent will be paid a 10 percent commission on the tax payable, a major portion of which will be received by the TRPs. The plan is to pay commission to agents for the next 5 years in return for finding new taxpayers.
With their help, income tax collection will be increased by increasing tax collection. Despite having taxable income at the upazila-municipal level of the country, many are not paying taxes. NBR is not even able to reach that place due to lack of manpower. So, the desired level of revenue is not being collected. At present there are more than 8.8 lakh TIN holders but only 2.9 lakh taxpayers have submitted returns in the current fiscal year.
In this regard, the executive director of the private research organization Policy Research Institute (PRI). Ahsan H Mansoor told that there is no need to hire agents to find new taxpayers or to file returns. NBR can work on it. This is possible only with the existing manpower. When a person gets a TIN, his address, name, phone number are given. Based on that information, NBR can write to the TIN holder and take action as per Income Tax Act.
On the other hand, the former general secretary of Dhaka Taxes Bar Association, Sufi Mohammad Al Mamun, said that this thinking will not be able to play a helpful role in increasing tax fraud and collection. Rather, social discontent may arise. Because, the duties and powers of the agent will never be the same as that of the tax officers.
Tax-free income limit increases: NBR has decided to increase the tax-free income limit of individuals after two fiscal years taking into account inflation. It will be increased to Tk 3.5 lakh or Tk 4 lakh. Prime Minister Sheikh Hasina will take the final decision in this regard in the May 14 meeting. However, NBR wants to keep the tax-free income limit at Tk 3.5 lakh. Because, if this limit is increased to Tk 4 lakhs, many taxpayers will go out of the net. This will reduce tax collection.
The budget analysis of 10 financial years shows that the tax-free income limit in 2014-15 was Tk 220,000. Tk 2.5 lakh was made in the financial year 2015-16. Tk 3 lakhs in the financial year 2020-21. Individual taxpayers have been paying income tax accordingly for the last 2 financial years.
In this context, a senior officer of NBR said without revealing his name, increasing or decreasing the tax-free income limit of the individual category has become a matter of political decision. So, what will be the limit of tax-free income, it depends on the decision of the highest level of the government. But NBR wants it to be Rs 3.5 lakh. This will benefit both parties (Taxpayer-NBR).
No good news for corporates: Corporate tax rates are being kept unchanged for the next financial year. Corporate taxes were cut for 3 consecutive fiscal years to combat the corona pandemic and global recession. NBR has decided not to reduce the tax rate this time.
According to the data, the corporate tax rate for listed companies was 25 percent and 35 percent for unlisted companies in the financial year 2019-20. In the next fiscal year (2020-21), the tax rate for unlisted companies was reduced from 2.5 percent to 32.5 percent. Following this, the tax rate of listed and unlisted companies has been reduced by two and a half percent to 22.5 percent and 30 percent respectively in the fiscal year 2021-22.
In the latest current budget, if more than 10 percent of the company’s shares are offloaded through IPO, the tax rate of listed companies has been reduced by two and a half percent to 20 percent. And if less than 10 percent shares are offloaded, the tax rate is fixed at 22.5 percent. General company tax rate has also been reduced by 2.5 percent to 27.5 percent.

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