Taxpayers to get refunds in their bank accounts
The tax authority has drafted a new income tax law that seeks to automatically provide refunds of excess tax paid by citizens to their bank accounts, said the National Board of Revenue (NBR) yesterday.
The move comes at a time when the issue of availing refunds of excess tax continues to be very difficult for taxpayers, mainly for inertia among taxmen seeking to avoid future complexities.
In fiscal 2018-19, Tk 1,764 crore was refunded against a collection of Tk 69,074 crore. The refund amounted to only Tk 65 crore in fiscal 2017-18, according to the NBR's annual reports.
The draft law, which comes in Bangla for the first time, also looks to curb taxmen's discretionary powers, which have been an issue of contention between taxpayers and officials for a long time.
"We have prepared the draft in order to make it taxpayer-friendly," said NBR Chairman Abu Hena Md Rahmatul Muneem at a press briefing at the NBR headquarters.
"We have made the law easy to understand for taxpayers and incorporated international best practices to make it business friendly," he said.
The revenue administration, which collects more than 85 per cent of state revenue, arranged the briefing after posting the draft on its website for opinions from stakeholders to ultimately replace an existing Income Tax Ordinance 1984.
Muneem, also senior secretary to Internal Resources Division under the finance ministry, said the ordinance was introduced bringing some modifications to an income tax law of 1922.
However, as a lot of things have changed over time, including types of businesses and accounting norms and practices, it has become necessary to introduce a new law in line with international standards.
"This is a 100-year old law," he said, adding that the existing rules were not easy to understand for many.
The tax authority took the initiative to frame a new income tax in fiscal 2010-11 with support from International Finance Corporation. Later, the NBR decided to revise the draft since the feedback from stakeholders was not positive.
When former Finance Minister AMA Muhith pledged in his budget speech to introduce a new income tax law by 2016, the NBR formed a committee involving taxmen.
Several years have passed since then.
Muneem did not want to explain the reasons behind the delay.
In the new draft, the NBR suggests formulation of a specific guideline for selection of taxpayers' files for audit and carrying out audits in order to ensure transparency and a taxpayer-friendly environment.
It also aims to introduce an electronic tax management system to do away with taxpayers needing to visit tax offices.
Issues have been incorporated to curb tax avoidance by local companies through transfer pricing — a transaction under which one division or associated entity of a company sells goods or services to another division of the company or group.
"As a part of international best practices, we have added domestic transfer pricing in the law," said NBR Member Tax Policy Md Alamgir Hossain.
The draft law has also incorporated Anti-Avoidance Rules to prevent tax avoidance.
The draft law seeks to have rules making withholding tax collection clear and specific, dispelling ambiguity in collection of tax at source from resident and non-resident taxpayers.
Officials said the draft law has not recommended any tax rate. It has kept the issues of fixing tax rates and surcharge to be decided in parliament.
The NBR said it framed the new draft income tax law with the aim to accelerate economic activities, bring about transparency and accountability and modernise the tax system.
Muneem said the NBR would receive comments and feedback on the draft until November 25 this year.
"We want to place the draft bill with the cabinet in December," he said.