85% companies yet to file returns

Despite frantic efforts made by the National Board of Revenue (NBR) to raise the number of taxpayers, 85 per cent companies having TINs did not submit their returns.

According to the data available with NBR, as many as 31,000 companies out of 199,030 having Taxpayer Identification Numbers (TINs) submitted their returns last fiscal year. It means that only 15.56 per cent of them submitted returns and the rest are neither paying tax nor filing returns.

Currently, 278,277 companies are registered with the Registrar of Joint Stock Companies and Firms (RJSC).

Accordingly, about 71 per cent of the companies have TINs while about 29 per cent are yet to be brought under tax net.

As of January 17 this year, 7,608 companies filed their corporate tax returns for FY23. As per the law, though it is mandatory for each company to file returns, 85 per cent companies evaded corporate taxes. Of the total, there are 139,505 public and private companies and 59,525 firms as of January 17, the official data showed.

The revenue board sources said only directors are required to provide personal TINs for opening a company. TIN is to be taken after company approval, but no one submits returns or takes TIN after getting approval. In such situation, NBR has taken initiative to bring all the companies, listed with RJSC, under the tax net.

When asked about the issue, a member of NBR told The Business Post that they have provided mandatory TINs to many of those who did not have TINs earlier. “Even we have increased return filing to 31,000 from around 28,000 a year back.”

He said that they have not been in the digital era for long, so it takes time to increase return filing at desired level. As the revenue administration is trying their best, hopefully the situation will change and improve within a couple of years.

He further said that there are some non-operating companies among them. The reason is why the statistics showed different number between RJSC and NBR, as well as TIN-holders and corporate tax return filing, he continued.

The NBR member said that without TIN, no company can do any work, even if it wants to open a bank account, it definitely requires a TIN. Now it requires a TIN for any work. But last year, many could not get their returns audited due to DVC (Document Verification Number).

Addressing it is also a reason behind lesser return filing than TIN-holders, he said, adding that the taskforce is working to bring all eligible establishments under the tax net.

Both individuals and companies pay taxes to the government on income. Even though there is a tax-free limit for individual taxpayers, it is not for companies. The company pays tax at taxable rates on annual profits.

Although the number of company taxpayers in our country is less, they pay more tax than individuals. The statistics showed that only 2 per cent of total taxpayers are company taxpayers. But the company pays 65 per cent of the total income tax revenue.

Currently, the number of TIN-holders, including individuals and companies, is 8,416,129 across the country while to date 2,851,934 taxpayers filed their income tax returns. The corporate houses pay taxes at 10 levels. The lowest tax rate is 20 per cent and the highest rate is 45 per cent.

Even it can be seen that the audit report is prepared to show more assets of the company to take out loan from the banks, but many companies evade taxes by concealing real income in their income tax returns through irregularities and frauds due to a lack of monitoring. The government is not getting expected tax from this sector.

In a bid to curb such irregularities, NBR has taken steps to reform the tax system in the corporate segment. As part of that, the revenue board formed a seven-member taskforce, headed by a senior officer of its Central Intelligence Cell, in August 2020.

The sources said that the committee is working to prevent fake audit reports and trying to bring the companies under the tax net.

The officials said that if fake audit reports are stopped and everyone can be brought under the tax net, the board can collect additional tax revenue of around Tk 2,000-2,500 crore from this sector, but the activities are yet to see a ray of hope.