Home ›› 11 Oct 2022 ›› Front
Out of a total 2.73 lakh companies registered with Registrar of Joint Stock Companies and Firms (RJSCF) only 11 per cent paid corporate tax in the last fiscal year.
According to the National Board of Revenue (NBR), only 29,680 companies submitted their income tax returns in the FY 2021-22 while 2, 72,597 companies had been registered through the office of the Registrar of Joint Stock Companies and Firms till June this year.
Over 2.42 lakh companies are yet to be brought under the corporate tax net leading to revenue shortages every year putting pressures on the country’s overall economy.
Tax evasion of those companies is increasing government borrowing from banking sources and sale of savings certificates to meet the budget deficit, economists stated.
The number of companies being registered is on the rise but they are doing their businesses without paying taxes, a high official of NBR said. NBR is trying to bring them under tax net, he added.
Currently, 2, 75,460 public, private, foreign and other types of companies are registered through this government entity.
The revenue board lagged behind around Tk29, 000 crore in the last financial year while the government net borrowing was Tk95, 582 crore from banking and non-banking sources.
The target of government domestic borrowing for the FY23 was set at Tk1, 46,335.0 crore in the national budget.
Of which, the target of borrowing from the banking system was set at Tk1, 06,334.0 crore and the target of borrowing from other domestic non-banking sources was set at Tk40, 001 crore including Tk35, 000.0 crore through net sales of National Savings Schemes.
The government paid high interest rate in national saving and bank borrowing to meet the budget deficit.
But if NBR is able to collect more revenue by bringing those companies under tax net the government borrowing can be decreased drastically, said an economist.
The NBR official said NBR is taking some initiatives to increase revenue and bring companies under tax net by making submission of income tax return obligatory.
Already companies and people are submitting income tax returns to get essential facilities, he said.
According to the income tax ordinance and draft law, people and companies have to submit return if they have tax identification number (TIN). But a huge number of companies did not pay income tax even after having TIN.
NBR is looking for the companies registered with the joint stock company but yet to have TINs from NBR.
A NBR survey conducted by a taskforce of seven officials in 2020 showed there were 90,000 companies registered with Joint Stock Company but have no TINs.
Later the board focused on increasing the number of TIN holder companies and succeeded accordingly, officials said.
According to the board, now over 1.5 lakh companies have TINs while it was around 77,000 in 2020.
The official said a good number of companies registered with a minimum paid-up capital without any inspections by Joint Stock Company have no offices. “Even we haven’t found them in their offices mentioned in the registration forms.”
Bangladesh Economic Association’ former General Secretary Prof Dr Ainul Islam said the NBR is yet to achieve the capability of collecting revenue by bringing the companies under tax net.
However, the board blamed the lack of revenue officials for the shortages of revenue collection and that is why the board is working to switch to full automation.
He said, “Even the revenue board cannot compel TIN holders to pay income and corporate tax. Every time, we have the target to increase the tax-to-GDP ratio to 15 per cent but NBR cannot increase the ratio significantly.”
“The World Bank and International Monetary Fund also stressed increasing the revenue collection and expanding tax net and warned about revenue shortage,” he said.
