They suggested automated tax collection, incentivizing widening of tax net instead of revenue to prevent harassment by collectors
Business associations have called for revisions to the tax collection system to ease the tax burden on enterprises that are already struggling due to the Covid-19 pandemic.
With the budget session for the 2021-22 fiscal year coming to an end, the business community has been lamenting the payment of higher taxes on top of losses caused by the pandemic.
In addition, they have called for automated tax collection and incentivizing the widening of the tax net for collectors, as the current system of incentivizing revenue collection is creating unhealthy competition among them and leading to the harassment of businesses.
"Food importers have to pay the highest import duties compared to other sectors, having an overall total-tax-incidence (TTI) ranging from a minimum of 150%-200% on various products. At the same time, we are subjected to corporate tax at the rate of 37%," said Golam Nabi, president of Bangladesh Foodstuff Importers & Suppliers Association (BAFISA).
BAFISA has already sent a letter to Bangladesh Bank and other relevant bodies asking for waivers on loans availed by the sector's businesses. The sector's companies have been facing issues in paying loan instalments with interest.
"The pandemic severely disrupted the sector, with cash flow and the financial capacity of both importers and suppliers dipping since February 2020. Additionally, revenue targets set by the National Board of Revenue (NBR) and the current incentives provided to officers at the field level have added pressure on the businesses of the sector," the BAFISA president added.
The sector's businesses also faced various problems, including periodic payment of value-added tax (VAT) and harassment by tax collectors, he added.
The Dhaka Chamber of Commerce and Industries (DCCI) earlier advocated a cut in the time for providing VAT rebates to businesses to one month instead of three months, and the withdrawal of the discretionary power of field-level VAT officials below the rank of assistant commissioner or assistant director.
"The increasing revenue target each year is churned from a fixed number of taxpayers. The focus should be on widening the tax net and collecting officers should be incentivized on that, not on revenue collection as it induces harassment of businesses facing disruptions due to the pandemic," said Rizwan Rahman, president of DCCI.
"It is important to increase the tax coverage without targeting tax collection. We have to change the way VAT is collected," he added.
Although various tax automation projects have been taken since the 1990s to reduce harassment, no facility has been automated except the adoption of TIN in the individual category, said a National Board of Revenue (NBR) official on condition of anonymity.
"Tax collecting officers are not provided incentives on meeting the tax revenue target of the government. We empathize with the business community on the disruptions induced by the pandemic, but we have to collect tax to enable the government to execute its duties," said another top tax collecting officer of NBR.
The officer said every country had the provision to reward its revenue collecting officials under the Income Tax Ordinance Act. However, officials rarely received such rewards.
The provision in question allows rewards for the identifying of concealed or undisclosed revenue, and the official is rewarded only on succeeding in recovering the whole amount.
“To identify and recover the total amount from taxpayers in a tax circle of 10,000-40,000 individuals, it will take more than two or three years to close the case after it is opened following an extremely complex process,” the official added
"Officers are frequently reassigned to different tax circles over a period of three years, which makes it even more of an impossible feat," the NBR tax collecting official further said.