Steps underway to curb tax evasion by foreign workers

The National Board of Revenue is going to tighten noose on tax evasion by foreign nationals working in Bangladesh, with or without work permits.

The NBR's planned measures include formation of a taskforce with agencies that deal with foreigners for better monitoring, and conduct raids on firms that employ foreign nationals with or without valid work permits.

"There are allegations that many foreigners are working here illegally and many leave the country without paying taxes after working for short periods," NBR said in a statement yesterday.

It has become necessary to monitor the income tax payment status of foreign workers, and a taskforce with representatives from related agencies will collect information about the foreign nationals and coordinate the process, said NBR.

The tax administrator unveiled the plans after a meeting with officials of chambers and trade bodies, including the Federation of Bang-ladesh Chambers of Commerce and Industry, at its headquarters.  The meeting was convened as part of NBR's plan to impose fines and initiate criminal proceedings against employers who appoint foreigners illegally.

NBR is making the move as the country is being deprived of a significant amount of revenue for factors such as a lack of monitoring, no real database of foreigners working here, inadequate coordination among related agencies and non-compliance with rules by a section of employers, officials said.

The tax authority earlier tightened rules for appointing foreigners in local firms. Anyone appointing foreigners without approval from the Board of Investment or other related authorities can now face a cash penalty of up to Tk 5 lakh, or a maximum three-year prison sentence, or both.

NBR will also open booths at the airports and land ports to check whether foreigners who leave the country have tax clearance certificates, it said.

Foreigners are required to pay 30 percent tax on their yearly income in Bangladesh, and have to submit tax clearance certificates when they leave the country.

There is no actual data on the number of foreigners residing in Bangladesh, but the number may be nearly two lakh, according to an estimate by the Special Branch of Police.

Foreigners are mostly employed in the garment and textiles sector, hotels and restaurants, massage and beauty parlours, English medium schools, cement factories, power plants and the services sector.

The Indians, Sri Lankans, Chinese, Pakistanis, Koreans and Filipinos make up a majority of the numbers, according to taxmen.

However, not all have work permits. The total number of valid work permits issued by BoI, Bangladesh Export Processing Zones Authority and NGO Affairs Bureau is estimated to be more than 10,000.

The tax administrator earlier sought a list of foreign nationals working in Bangladesh from various agencies to ensure compliance.

Apart from a provision of penalty on firms for appointing foreigners illegally, the NBR also included a provision that any industry or infrastructure project that enjoys tax breaks, will lose the benefit for appointing foreigners illegally.

Employers are also required to deduct income tax in advance while paying foreigners.

Taxmen said many foreigners come to Bangladesh on tourist or business visas, but they take jobs without approval from the agencies concerned and leave the country without paying taxes.