Govt likely to reduce corp taxpayers’ return filing load

The government may reduce the return submission load of the corporate taxpayers in the upcoming budget for FY24 to increase more compliant companies, decrease paperwork and cut spending more extra money.

The number of tax return filling at-source could be trimmed down to 12-14 in a year to ensure business friendly environment, according to the sources from the Ministry of Finance.

At present, corporations have to submit 29 returns for 'at-source tax' in a year, putting the companies under more strain in preparing volumes of paperwork and spending more additional money.

In last year, a 20-member review committee, comprising public-and private-sector representatives, on the Income Tax Act 2022 (draft) recommended the National Board of Revenue (NBR) to curtail the return submission load for compliant corporates to 12 in a year to make it business friendly.

The NBR published the draft law in October 2021 eliciting public opinion and it formed the review committee on October 6, 2022 to finalise the law. Later, the cabinet approved the draft of Income Tax Act 2023 in principle after examining the existing income tax law on January 23.

“The required tax return submission for making the corporate house compliant is supposed to reduce in the new income-tax law to make doing business easier, but perhaps the law will be not passed by the parliament before the next budget. That is why, the NBR has decided to introduce the provision in the budget,” said a higher official of the finance ministry.

“The proposed provision will expand the tax net and it may bring a large number of taxpayers into tax compliance, thus enabling the NBR to collect more revenue and help to meet the conditions of the International Monetary Fund’s (IMF) for the $4.7 billion loan,” said the official.

“This move will increase competitiveness of the corporates in the international market and attract investment, including FDI. It will also reduce their cost of paperwork and consultation fee, and increase compliant taxpayers, as well as create a more business-friendly income-tax system,” said Snehasish Barua, a member of the review committee and also an adviser to Foreign Investors Chamber of Commerce and Industry (FICCI).

The NBR has to meet several IMF conditions as part of the $4.7 billion loan programme. One of the conditions is to increase the tax-to-GDP ratio by 0.5 percentage points in FY24, 0.5 percentage points in FY25, and 0.7 percentage points in FY26.

To achieve the target, the NBR will have to collect an additional Tk 2,34,000 crore in revenue over the next three fiscal years.

85% cos evaded corporate tax

Just a small number of companies registered in the country pay taxes to the revenue board while many registered taxpayers do not submit their tax returns, resulting in revenue shortages every year and putting pressure on the country’s overall economy.

The latest statistics of NBR as of January this year showed that 199,030 companies have Taxpayer Identification Numbers (TINs) while 278,277 public and private companies are registered with the Registrar of Joint Stock Companies and Firms (RJSC) under the ministry of commerce. Accordingly, about 71 per cent of the companies are under tax net.

According to the NBR, only 31,000 companies submitted their tax returns in the FY 2021-22, meaning around 11 per cent out of total registered companies under RJSC, or about 15 per cent companies having TINs, paid their taxes.

As per the law, every company has obligation to file returns, but 85 per cent companies evaded corporate taxes rampantly.

Out of the company TIN holders, there are 139,505 public and private companies and 59,525 firms as of January last, the NBR data showed.