• Monday, November 24, 2014

NBR sees higher earnings from wealth surcharge

Sohel Parvez

The revenue administrator registers increased collection of surcharge on wealth due to higher compliance by rich people who own more than Tk 2 crore in net wealth.
The earnings of the National Board of Revenue from surcharge are likely to rise 48 percent year-on-year to Tk 150 crore in the outgoing fiscal year. The amount was Tk 131 crore during the July-April period, taxmen said.
"The amounts reflect a very good response and increased compliance by wealthy taxpayers," an NBR official said yesterday.
This is the third year since the government introduced the surcharge on payable tax of people having more than Tk 2 crore in net wealth. The tax was levied as an alternative to wealth tax in a bid to establish equity in the society, taxmen said.
Initially, in fiscal 2011-12, the government imposed 10 percent surcharge and the tax collector logged Tk 65 crore from this source.
In the current fiscal year, the surcharge was imposed in two slabs -- 10 percent on payable tax of persons holding more than Tk 2 crore in net wealth and 15 percent for more than Tk 10 crore.
The introduction of the two slabs is one of the reasons behind the spiral in collection from this area, the NBR official said, asking not to be named.
Besides, the rich people who were initially unaware of the new measure later started filing returns with surcharge, the official said.
"The rate of compliance has increased and it will rise further in the coming years," he said.
The NBR has not compiled the data on how many wealthy persons have paid surcharge in the current fiscal year.

However, some taxmen said the number of people paying surcharge would be around 5,000, which is much lower than their estimate of the number of rich people having more than Tk 2 crore in net wealth.
In a study in 2012, Economic Research Group, a local research organisation, said the number of people having wealth worth Tk 2 crore or more would be 1.05 percent or 10,500 of 10 lakh active taxpayers.
"I don't think all the rich people are coming to pay surcharge on their wealth. But they will have to come," the NBR official said.
Despite increased collection of surcharge, Centre for Policy Dialogue, a think tank, said there is a need to review valuation of wealth, particularly in real estate (both land, house and flats), to generate an adequate amount of revenue from the sector.
"Asset valuation is a major problem," said CPD Research Fellow Towfiqul Islam Khan, "Assets that are being shown in the returns appear unvalued if we take into account the rising prices of property in Dhaka and Chittagong."
The NBR should take steps to ensure proper valuation of apartments and lands, he said.

Published: 12:00 am Wednesday, May 21, 2014

Last modified: 10:46 pm Tuesday, May 20, 2014

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