Effective steps should be taken to prevent tax evasion

Md. Zillur Rahaman :

In Bangladesh, the tendency to not pay taxes properly has become a common issue. Many people buy goods and services through tax evasion, which causes various problems in the economy of the country. There is widespread discussion about what is being damaged in the economy of Bangladesh due to tax evasion and what the remedy is, but there is no effective remedy.

In fact, tax evasion is a kind of gentle crime. Socially well-established persons, corporate firms or well-established companies do some criminal acts in the process of their professional work, called a gentle crime. Such as income tax evasion, VAT fraud, less payment of import duty, excise duty not properly paid etc. The impact of this gentle crime is deadly in the society.

According to a recent research report by the Center for Policy Dialogue (CPD), the government lost the revenue of Tk 226,236 crore in FY 2023 due to tax evasion and the amount of tax evasion was Tk. 96,503 crore in FY2012, i.e. the amount of tax evasion in the country has more than doubled in the last 11 years.

According to the CPD Research, ‘Corporate Income Tax Reform and Tax Justice Perspective’, a huge amount of taxes are being levied on the one hand, and on the other hand, many institutions are facing problems with paying taxes.

About 45 percent of the company participating in the study said that tax officials sought kickback while paying corporate taxes. In addition, 82 percent of companies have claimed that existing tax rates are unfair.

Studies have shown that tax evasion has been increasing at an alarming rate in the country since the 2011. In 2012, the amount of tax evasion was Tk 96,503 crore, which increased to Tk 133,673 crore in 2015.

The CPD says the main reason behind the tax evasion is high taxation, poor surveillance, complicated laws and mass corruption in the tax system. The report says, “From the point of view of taxes, extensive tax evasion discourages honest taxpayers and increase the tax burden on citizens loyal to the law.”

Economists say the VAT collection in the case of indirect tax due to tax evasion is not deposited in the government’s treasury.

Again, there is no surveillance of the government in these places, the kind of surveillance that the company or individual is supposed to be in the case of direct tax, especially to increase taxes, increase digitalization, simplify.

A total of 120 companies have taken information on the CPD Corporate’s income tax research- listed and non-listed in the stock market in Dhaka and Chittagong. Besides, the comments of the business leaders of the five sectors-the garments, plastic, information technology, banking and leather-were taken by the business leaders of these five sectors and the survey was conducted in December in the last year.

According to the CPD, the tax evasion of Tk 226,236 crore has been evident in 2023 and the corporate tax evasion is half or 50 percent. As a result, the corporate tax has been evacuated at Tk 113,118 crore in 2023.

All the measures need to be taken to prevent tax evasion- first; a massive campaign should be launched to increase public awareness on the harmful effects of tax evasion. People can be encouraged to pay taxes through media, social media and educational institutions.

Second, the tax payment process needs to be made easy and transparent. People can be encouraged to pay taxes by increasing the benefits of paying online and providing necessary information and assistance.

Third, tax audit and disciplinary action must be strengthened. Strict legal action should be taken against those who are tax evasion so that others take education from it.

Fourth, the people have to convince the people that they are getting government services and benefits directly by paying taxes.

Development in health, education, security, etc., people will be interested in paying tax spontaneously. Fifth, incentives and benefits can be provided for those who pay regular taxes. For example, discounts, prizes or honors can be paid for tax payments.

Many are known to Gaus Mia, one of the best taxpayers in Bangladesh. He is not a celebrity as a businessman, he has much bigger businessmen, industrialists, but the businessman of Hakimpuri Jorda was elected the best taxpayer 20 times in his lifetime.

It turns out that when the NBR gives the best taxpayer award, he is the best taxpayer behind all celebrities and big businessmen. In this case, his honesty and love for the country are of course glory and honor. At the same time, it is a shame for those who are avoided taxed year after year.

On the other hand, many may be remembered by former NBR officer Matiur Rahman discussed in the goat-scandal. Last year, Matiur Rahman’s son Arnav came to the discussion before the Eid of the sacrifice by buying a goat of Tk. 15.00 lakh. Then came out of his crores of cars and various information about the lives of his life.

Gradually, Matiur Rahman’s wife, sons and daughters gradually came up in the media, and he was then OSD. The ACC has already filed a case against him and has recently been arrested and sent to jail.

Moreover, a member of the NBR and a member of the Taxes Appellate Tribunal and former Tax Commissioner have been sent to the compulsory retirement. Both of them have been accused of engaging in various irregularities and corruption by collaborating the taxpayers while working in the Income Tax Zone.

In fact, the major obstacle to meeting the NBR goals is the manpower crisis and dishonest manpower. The institutional and technical capabilities of the NBR should also be increased. In essence, manpower, technological capacity, transfer pricing cell- these need to be strengthened. Another major problem with the NBR is automation.

We have been hearing about automation for many years. At various times, numerous projects, including automation, income tax automation, customs automation, came and went. But we did not get a full automation service that could not be prevented from tax evasion.

Overall, the tendency for tax evasion is doing serious harm to the economy of Bangladesh. This requires awareness and responsible behavior of the general public as well as the general public.

It is the responsibility of all of us to play an active role in the development and prosperity of the country by paying taxes.
(The author is a Banker and Columnist Satish Sarker Road, Gandaria, Dhaka.
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