NBR to introduce provisions to bring trusts under tax net

Al Amin :
The National Board of Revenue (NBR) is going to incorporate provisions in the upcoming budget for 2023-24 to scrutinize the income of different trusts and charitable firms, officials said.

Under the provision, submission of income returns of the trusts will be mandatory from the next fiscal year, the officials added.
They said the trusts and trust-like institutions were not filing their income tax returns and paying taxes regularly, despite they are taxable firms as per the Tax Ordinance 1984.

So, if the provisions are incorporated, the trusts will be obliged to file their income tax returns and their financial transactions will be transparent, they added.
They further said that many corporate firms are forming trusts in different names to evade taxes and completed transactions through bank accounts of the charitable institutions to hide their own income.

As a result, the government is depriving of a huge amount taxes every year.
Besides, the funds of the trusts and the trust-like institutions are being used for financing to terrorists and are being laundered as there is no specific regulatory body to oversee the financial transactions of the firms, they said.
So, it will be possible to increase tax collection as well as to prevent tax evasion by making mandatory the submission of their income tax returns, the officials added.

Syed Aminul Karim, former member of the NBR, told The New Nation, “This is a positive initiative. It will help to prevent tax evasion

by the charitable institutions as well as to help increasing tax net.”
NBR is facing tough task to increase tax-GDP ratio to 9.5 per cent by 2026 to meet International Monetary Fund (IMF) conditions. Currently, the ratio is only 7.8 per cent.

Achieving the goal of the Washington-based multilateral lending firm, the revenue board will have to collect Tk 4.10 lakh crore in FY24, Tk 4.84 lakh crore in FY25 and Tk 5.80 lakh crore in FY26.

Fulfilling the target, the revenue board has already been taken various initiatives including reform steps and the additional revenue collection target will be possible, if the measures are implemented.

NBR has already introduced e-payment, e-return filing, e-TDS, e-office management and e-TIN system to reduce harassment.
If the steps are supported by adequate financing, hardware, software and human resources properly, then revenue generation can be increased sustainably, the officials said.

Apart from this, it is possible to identify areas of tax compliance and tax evasion in coordination with other economic institutions, they added.

On the other hand, the steps will help indentify tax evasion areas through sector-wise audits by selecting risks, the tax officials said.
As per the NBR data, over 31.96 lakh returns have been submitted till March this year, although the number was around 25.54 lakh in the last fiscal year. The increase in return submission was possible only for these initiatives, the officials said.