TINs of firms surge, but return filing sluggish
The National Board of Revenue (NBR) has seen a massive surge in registrations for Taxpayer Identification Numbers (TIN) by companies, mainly due to its increased monitoring and efforts to bring all registered firms under the tax net.
However, the spectacular growth in TIN registration has not translated into an equal growth in return submissions by companies.
The number of companies with TINs stood at 1.67 lakh by the end of the 2020-21 fiscal year (FY), up 115 per cent from 77,820 the previous year, showed NBR data.
But only 29,785 companies furnished tax returns in FY21, up 18 per cent from the year before.
Officials say the number of TINs shot up in the last fiscal year after the NBR took initiatives to bring non-compliant firms under the tax net by collecting data on companies registered with the Registrar of Joint Stock Companies and Firms (RJSC).
In August 2020, the NBR formed a task force to collect data on companies from the RJSC and match its TINs database. Under the initiative, a number of companies were brought under the tax net while a portion of companies also got registration for various factors, including the NBR's drive.
However, compliance did not improve to that extent with officials attributing it to a lack of monitoring by field offices to ensure submission of tax returns, existence of dormant companies and unwillingness of taxmen to verify audited financial statements submitted by companies along with their tax returns through the Document Verification System (DVS).
The NBR and the Institute of Chartered Accountants of Bangladesh launched the online system in November 2020 to plug the scope of submitting fake audit reports.
In its order, the NBR said the DVS would generate a document verification code (DVC), which would feature in every audit report.
As per the order, tax offices are responsible to use the DVC to examine audited reports prepared after December 1, 2020.
However, insiders said the job is not properly handled by field offices but if done right, it could ultimately lead to an improvement in compliance and return filing.
Mohammed Forkan Uddin, convenor of the ICAB DVS taskforce, said the use of DVS will increase revenue collection as the scope of furnishing fake audit reports by unruly firms will stop.
The main application of DVS began from June 2021 and its impact could be seen in the tax return submission in fiscal 2021-22.
"We expect to see a major reflection in fiscal 2022-23," he added.
Contacted, a top official of the NBR said their monitoring is on to ensure return filing.
"We will strengthen our monitoring so that the rate of submission increases," the official added.