NBR sets its sight on cranking up tax-GDP ratio

The National Board of Revenue (NBR) has decided to intensify its activities, including tax survey, inspection, monitoring and realisation, to increase the country's Tax-GDP ratio, which is currently the lowest in the region despite a 9% growth in individual income tax.

“The Board has already directed all the field offices to intensify and strengthen their respective tax survey to have a justified growth in the coming days,” a senior official of the NBR told UNB.

He said that the Board has also directed the field offices to give extra efforts for collecting advance income tax, which is a good source of income tax collection, where applicable.

The revenue target for 2020-21 fiscal has been fixed targeting 8.6 per cent growth over the revised target for 2019-20 fiscal.

The initial revenue target for 2019-20 fiscal was 3778.1 billion taka, which was later revised to 3480.7 billion taka.

The total revenue collection target for 2020-21 fiscal, as set out in the budget, is 3780 billion taka of which the NBR is expected to contribute 3300 billion taka. The revenue from non-NBR sources was estimated at 150 billion taka while non-tax revenue at 330 billion taka.

Of the grand amount for the NBR, 1039.45 billion taka will come from income, profit and capital tax; the biggest chunk of 1251.62 billion taka will come from VAT; while supplementary tax will provide 578.15 billion taka, import duty 378.07 billion taka, and miscellaneous items to fill in the rest.

The NBR official mentioned that the time for paying tax instalment for the second half is after December. “So the collection for the Income Tax Wing will be in a good position from this month,’ he said.

As part of intensifying the tax survey, information on the owners of property in various areas like Gulshan, Banani, Uttara, Dhanmondi and other posh areas of the capital city will be gathered.

The eligible but not enlisted persons will be given an electronic tax identification number (e-TIN) instantly. “Proper directives have been given to the field level officials,” the NBR official said.

Punitive measures will be taken against the e-TIN holders who do not submit their income tax return or apply for a time extension.

The NBR teams will visit houses, shops and other commercial establishments in the city’s various areas to find out the potential taxpayers. The officials will take support from service agencies to scrutinise information related to income, wealth and property of the potentially eligible taxpayers.

The survey teams are collecting information related to national identity cards, trade licences and other business documents from people having income from house or business properties and from service or other professions.

According to the NBR sources, the Board has directed the tax commissioners to bring all eligible persons and organisation under the tax net and take initiative to remove the phobia regarding tax payment.

It also asked to intensify the tax survey and activate the inactive TIN numbers as submitting income tax return has been made mandatory for every TIN holder from this fiscal.

The Income Tax Wing of the NBR has already given necessary directives to the field offices in this regard.

As a part of the internal survey, the field level officials have already collected possible taxpayers information from city corporations, Rajuk and sub-registrar offices. This is popularly ‘secondary data’. Secondary data refers to the information of the individuals that are already kept in any organisations.

The NBR also has started to collect information on the potential taxpayers at the upazila level through secondary data gathering, otherwise known as an internal survey.

According to data from the October 2019 issue of the World Economic Outlook, the tax-GDP ratio (tax revenue as a percentage of GDP) of the country was a miserly 9.9% on average during 2015-2019, compared to 19.8% for India, 23.9% for Nepal, 14.7% for Pakistan, and 13.5% for Sri Lanka, during the same period.

The ratio is 25.6% for developing countries and 35.9% for developed countries, according to the data.

The tax-GDP ratio is also a marker of how well the government controls a country's economic resources.

According to an official document, the tax-GDP ratio for the current fiscal has been projected at 11.9%, which would be lower than the 12.4% recorded in 2019-20. Despite Covid hitting the revenue-generating sectors hard, the government estimates it to rise to 12.2% in 2022-23.