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Shrink informal economy, exemptions to boost tax net

NBR extends return filing deadline to Dec 31
Staff Correspondent
01 Dec 2022 00:00:00 | Update: 30 Nov 2022 22:30:52
Shrink informal economy, exemptions to boost tax net

Formalising the informal economy, minimising special tax exemptions, and ensuring sustainable digital integration and security in administration are a must for Bangladesh to expand the tax to GDP ratio.

Experts and the National Board of Revenue (NBR) officials made the observation at a seminar discussing direct tax management and tax net expansion, held at the NBR headquarters in Dhaka on Wednesday.

Discussants at the programme spoke in favour of reducing human involvement and boosting automation to help increase the taxpayers’ trust. They also suggested categorising tax commissionerates on the basis of functionality, not geography.

The NBR organised the seminar as a part of an observation marking the National Income Tax Day 2022, observed on Wednesday across the country. NBR chairman Abu Hena Md Rahmatul Muneem chaired the programme.

Comptroller and Auditor General of Bangladesh and chief guest Mohammad Muslim Chowdhury had earlier marked the day by freeing pigeons.

In a keynote speech, NBR Member (Tax Policy) Sams Uddin Ahmed said, “In the context of Bangladesh, special tax exemption, informal channels of business transactions and the informal economy are the key challenges in the tax net expansion and boosting the tax to GDP ratio.”

Recommending a few action plans, he said, “A gradual decrease of informal economy and innovative digital integration are must for sustainable tax management.

“The NBR has to bring undisclosed money into the formal economy and take an effective action plan for cross-border tax recovery to expand the tax net into new sectors.”

Muslim Chowdhury said, “There is no alternative to digitalisation in the fourth industrial revolution era, and an increase in ethical responsibility is required to expand the tax net by building trust among the taxpayers.

“The NBR has to increase confidence so that the taxpayers disclose the undisclosed money. If the need arises, the unwanted questionnaire to the taxpayers from the officials should be reduced to ensure a hassle-free environment, trust and compliance in tax services.”

Muslim also urged the NBR to reduce human involvement in the process.

He continued, “Increase commissionerates on the basis of functionality, and not by geographical considerations such as Rangamati and Dhaka. So that the officials can become experienced operators and the taxpayers can get relevant services easily.”

NBR chairman Abu Hena Md Rahmatul Muneem said, “Resource mobilisation would be difficult without a big reform in revenue administration. Simplification in the process and in relevant laws is a must to increase the tax net expansion. “There are big opportunities to carry out drastic reforms in the sector.”

Muneem urged NBR officials to resolve difficulties and simplify the services. He added, “The officials themselves have to identify the problems and address the solution. They then have to take a proper action plan to move forward.”

“The NBR is working on automation, but it is currently inexperienced in the matter. This is why the board is now focusing on partnering with the local IT farms.”

The NBR has extended the due date for filing income tax returns by one month in response to requests from various quarters.

“On Tuesday, we decided to extend the deadline till December 31. But we have a request for the taxpayers, please do not form a crowd again on the last day to submit the returns,” the NBR chairman said.

NBR officials said till Tuesday, 2.2 million people have submitted their tax returns, and some Tk 3,042 crore has been collected. Last year, a total of 1.55 million returns were submitted and Tk 2,000 crore was collected.

The revenue board expects that 4 million to 5 million returns will be submitted this year.

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