DOULOT AKTER MALA |
Published: July 01, 2021 8:43:49 AM
The tax authorities exceeded their target for collecting taxes from large taxpayers in the fiscal year (FY) that has just ended thanks to the money lightening and the withholding tax collection.
According to preliminary data from the Large Taxpayers Unit (LTU) under the income tax wing, companies and large individual taxpayers have paid taxes of Tk 240.11 billion by June 30, 2021.
The target for the unit was set at Tk 240 billion for the 2020-21 (FY 21) financial year – largely dependent on banking sector taxes.
The actual collection of LTU in FY 2019-20 was Tk 208.38 billion. The tax collection of the LTU rose by 15.38 percent in FY 21. However, the LTU missed its targets for FY 2018-19 and FY 2019-20.
Speaking to the FE, Md Iqbal Hossain, commissioner of the LTU under the Income Tax Department, said the opportunity seized by the undisclosed money owners generated a significant amount of taxes in the fiscal year just ended.
He said that more than Tk 1.0 billion in taxes had been mobilized from the undisclosed money owners, who had formalized income by paying a flat tax rate of 10 percent.
The government received a record amount of undisclosed revenue in the fiscal year just ended – the amount almost the same as the amount that has been lightened over the past fifteen years.
By May 25, around 10,404 people had announced their money when they made use of the flat-rate option offered on July 1, 2020.
The National Board of Revenue (NBR) received taxes worth Tk 14.45 billion, compared to Tk 144.59 billion, which was cleared on the occasion.
From FY 2005-06 to FY 2019-20, a total of Tk 145.95 billion undisclosed income was formalized on these occasions.
The LTU commissioner also referred to the realization of payment arrears and the upward trend in withholding tax collection as the main reasons for achieving the target.
“All the efforts of LTU officials, led by NBR Chairman Abu Hena Md Rahmatul Muneem, and the friendly taxpayer environment in the unit have encouraged the payment of actual taxes,” he said.
The government has set a realistic target for the LTU for fiscal 2020-21, down 11.66 percent from the previous fiscal year, given the deteriorating financial condition of large corporations.
LTU officials said they still need to gather sectoral data to see growth in corporate tax collection from the banking sector.
In the 2020 calendar year, the operating profit of the majority of private commercial banks (PCBs) has shrunk mainly due to the effects of Covid-19 and the introduction of the single-digit interest rate.
During the last two budgets, the government cut corporate tax rates to lower them to attract investment.
Field officials said the corporate tax rate cut had no material impact on revenue collection due to the increase in withholding taxes or withholding taxes.
According to an estimate by accountants, the overall tax burden of corporate taxpayers increased due to the collection of withholding taxes without a refund under a minimum tax requirement, Section 82C of the 1984 Income Tax Ordinance. However, NBR officials have expressed doubts that they have received a formidable response similar to the just-completed FY to the newly offered black money whitening program with 25 percent tax and 5.0 percent penalty tax for the current FY.
The Executive Director of the Policy Research Institute (PRI), Dr. Ahsan H Mansur said the LTU’s performance has been impressive amid this pandemic and no major reform or automation initiatives have been taken.
It is currently not measurable whether it is an effort-based service because the tax authorities do not define it, he added.
Total revenue collection could grow 12-15 percent in the fiscal year just ended, and LTU’s collection is geared towards that, he added.
Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman said that during the Covid era, large companies will be less affected than micro, small and medium-sized enterprises (MSME).
“Most large companies are compliant and traceable, so the collection from them is always relatively high,” he said.
The trend towards revenue collection always shows that large corporations contribute the lion’s share of NBR’s revenue collection – around 70 percent; From this perspective, the revenue collection goal has been achieved, he added.
On the flip side, withholding tax in the import phase, local supplies such as advance income tax and advance tax also played a role in revenue recognition, although businesses were burdened by a pandemic, he said.
Withholding tax affects companies’ cash flow and profit making, he said.
“Whether companies make losses or profits, withholding tax is levied, which is contrary to the fundamentals of the income tax principle.
The withholding tax is an aggressive revenue recognition tool for the government, “he said, demanding that the government rationally lower the withholding tax and shift dependency on it.[email protected]