57,000 new firms come under tax net in 6 months
An initiative of the National Board of Revenue (NBR) to bring non-compliant firms under the tax net has proved to be a boon as the number of TIN-holding companies went up by 73 per cent in just six months.
In August last year, the tax authority formed a task force to collect data of companies and firms from the Registrar of Joint Stock Companies and Firms (RJSC) and match it with the NBR's data on the companies with taxpayers identification number (TIN).
It found that 55 per cent, or 98,000 of the total of 176,000 companies and firms registered with the RJSC were outside of the tax net.
The team identified the companies that didn't file returns regularly and shared the list with the field offices to ensure that the firms come under the tax net.
Within six months, the number of TIN-holding companies rose to more than 135,000 as 57,000 firms came under the net for the first time.
"Almost 70 per cent of the companies that had been outside the tax net have been brought under the net," said a paper presented by Md Shabbir Ahmed, director of the NBR's Central Intelligence Cell, at a meeting last week.
At this rate, all companies in Bangladesh will be under the net by April this year, according to the report of the task force.
The NBR also focused on ensuring return submissions by all companies and filing of genuine audited financial accounts.
In order to do so, the tax administration teamed up with the Institute of Chartered Accountants of Bangladesh (ICAB) and rolled out software application Document Verification System (DVS) on November 12 to prevent unruly firms from submitting fake financial statements.
A month later, the NBR asked the field offices to verify each audit report and income tax returns using the DVS.
The ICAB also made it mandatory for its members to start using the application to generate code from the software and sign the audited financial statements. The initiative paid off.
The number of returns filed by companies has risen to nearly 40,000 so far this year, up from 28,000 in the previous year, NBR data showed.
In Dhaka, return filing went up 35 per cent year-on-year to 30,894 in the current fiscal year 2020-21, according to the report by the task force.
Historically, annual return filing grew about one per cent. Tax return filing by companies may double next year, the report by the seven-member team said.
The NBRs expects tax collection to increase by Tk 500 crore to Tk 1,000 crore this fiscal year and to Tk 3,000 crore in the next fiscal year.
Income is the second-biggest source of revenue for the NBR after value-added tax. Tax collected from companies accounted for 64 per cent of income tax collections in FY2017-18.