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Nine insurance companies served notices for tax evasion

  • Published at 02:31 am October 4th, 2017
Nine insurance companies served notices for tax evasion
Nine insurance companies have allegedly evaded taxes worth around Tk110.16 crore as Value-added Tax (VAT) on Agent Commission and Reinsurance Commission in the last four years. The insurance companies are Green Delta Insurance, Reliance Insurance Limited, Pragati Insurance Limited, Pioneer Insurance, Phoenix Insurance Company Limited, Eastland Insurance Company Limited, Pubali Insurance, Rupali Insurance Company Ltd and state-owned Sadharan Bima Corporation. The Large Taxpayers Unit for Value-added Tax (LTU-VAT) under the National Board of Revenue (NBR) issued separate demand notices to the insurance companies on September 24, asking them to pay the dues within 15 days of issuance of the notices. The LTU-VAT officials claimed that the insurance companies evaded Tk43.43 crore in VAT at source on agent commission between 2015 to 2016, and Tk66.73 crore in VAT on reinsurance commission from 2013 to 2016 calendar years. The companies will also have to pay 2% monthly interest on the actual dues for non-payment in time, the officials added. Green Delta topped the list of companies that evaded VAT at source on agents’ commission with dues of Tk13.29 crore, followed by Pragati of Tk6.63 crore, Reliance of Tk10.53 crore, Pioneer of Tk5.32 crore, Eastland of Tk3.60 crore, Phoenix of Tk2.73 crore and Rupali Insurance of Tk1.33 crore, according to the LTU-VAT. The unit also directed Green Delta to pay outstanding dues of Tk17.59 crore, Sadharan Bima of Tk17.42 crore, Reliance of Tk11.52 crore, Pragati of Tk5.73 crore, Pioneer of Tk3.70 crore, Phoenix of Tk4.17 crore, Eastland of Tk4.66 crore and Pubali Insurance of Tk1.94 crore, as the companies did not pay the VAT on reinsurance commission.

As the paid commission is taxable according to law, the insurance companies have to pay 15% VAT to the government exchequer on the paid commission, added the officials. The unit also claimed the insurance companies did not pay 15% VAT on reinsurance commission, which they received from other insurance companies. Meanwhile, LTU-VAT Commissioner Md Matiur Rahman told the Dhaka Tribune: “After scrutinising the annual reports of nine insurance companies we found that they had evaded around Tk110 crore in taxes.” “We have issued separate show-cause notices to the companies in this regard.” The notice directed the nine companies to explain why the amount should not be paid within 15 days of issuance of the notices. The companies will have to respond in-writing within the stipulated time or they can also seek hearings to explain their position. The VAT office will issue the final demand notice based on the reply of the companies. Md Khaled Mamun, CEO, Reliance Insurance Limited told the Dhaka Tribune: “We have received the notice. The is not an isolated issue, the whole insurance sector of Bangladesh is being affected by the NBR move.” He further claimed: “The NBR is demanding a huge amount of VAT from the insurance companies, which is outside the regulations. We will take the matter to the court.” Meanwhile, talking to the Dhaka Tribune, Bangladesh Insurance Association (BIA) President Sheikh Kabir Hossain said: The issuance of the notice has damaged the reputation of the firms, as it was issued without prior discussion with the companies. “The BIA has contacted the Finance Ministry, NBR and Insurance Development and Regulatory Authority for withdrawal of the VAT several times.” He said:“It is a delicate issue. Some companies have also filed writ petitions with the apex court against the VAT.” “For the sake of the insurance industry, we have urged the government not to impose VAT on agents’ commission and reinsurance commission. We hope the government would take a positive step in this regard,” he added.