NBR's intelligence efforts pay off
The central intelligence cell (CIC) of the National Board of Revenue has detected tax evasion of Tk 1,581 crore by individuals and firms in nine years to fiscal 2013-14.
The intelligence unit, which was formed in January 2004, has so far collected Tk 725 crore from these tax dodgers, according to a report by the CIC.
The amount detected is insignificant given the culture of rampant tax dodging in the country, said Ahsan H Mansur, executive director of Policy Research Institute (PRI).
But the CIC said its activities have made a "multidimensional impact" on tax compliance -- by recovering lost revenue, increasing voluntary disclosure of higher income and acting as a deterrent for potential tax evaders.
"Study reveals that most of the taxpayers who once encountered CIC investigation disclose significantly higher amount of income in post-investigation assessment years," the CIC said in its publication.
In its 10-year journey, the intelligence unit has detected evasion of tax, VAT and customs duty from businesses, individuals and their families.
The types of tax dodging include misreporting of sales by businesses, hiding the source of wealth, misreporting of income and wealth, and concealment of income and investments in fixed deposit schemes, real estate as well as the stockmarket.
The CIC detected evasion of Tk 180 crore, mostly income tax, in fiscal 2005-06. The amount fell below Tk 100 crore in the next two years when an interim government was in power.
The CIC said the adjustment of its investigation tune to the external ambience and additional workload demanded by the special circumstances in fiscal 2006-07 and fiscal 2007-08 resulted in a provisional dip in the quantitative performance.
The detected amount crossed Tk 100 crore in the next fiscal year and remained above that threshold in the later years. It detected the highest amount -- Tk 284 crore -- in fiscal 2013-14.
However, the detection-recovery ratio fluctuated over the years -- the lowest amount of recovery was 21 percent in fiscal 2008-09 and the highest at 74 percent in fiscal 2012-13. The average recovery rate was 45.9 percent of the detected evaded amount.
Officials at the intelligence unit said the rest of the amount is in the collection process at respective field offices.
Syed Md Aminul Karim, a former member of income tax at the NBR, said the unit will bring good results in the long run.
"The activities of the CIC have created fear among tax dodgers. So many people are now paying the actual amount of tax," Karim said.
The CIC has so far prosecuted more than 100 persons for tax evasion. "It has brought changes to taxpayers' behaviour. The impact of CIC is enormous. It has acted as a catalyst for revenue growth," Karim said.
However, Mansur of the PRI said the detected amount, given the tax evasion culture particularly among importers and manufacturers of products with high tax rates, is insignificant. He said a huge amount of tax is evaded for products such as cigarettes, cars and auto parts where the rate of tax and duty is high.
"With due respect, the level of their (CIC) efforts does not seem to be acting as an effective deterrent for tax evaders. However, this is welcoming."
Mansur said there is scope for increasing effectiveness of the cell. To free the CIC from influence, he said the unit should be empowered so that it can initiate cases on its own.
Karim, also a former director general of the CIC, said the intelligence cell should appoint an increased number of efficient and honest officers so that it can function better to detect tax dodging.
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