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The Bangladesh Investment Development Authority (BIDA) has requested the National Board of Revenue (NBR) to initiate some tax reforms as suggested in an action plan, prepared to help improve the country’s position in the Ease of Doing Business (EODB) index.
The reforms include reducing corporate tax audits, automating the submission of tax returns, simplifying and expediting VAT refund process, building awareness on new VAT act, and circulating the tax administration and law manual with clear explanation of rules and guidelines on tax audit.
The BIDA prepared a time-bound action plan on the basis of the declaration adopted at a meeting of some major stakeholders in both private and public sectors on July 8 last.
Bangladesh was ranked 176th in the EODB Report 2018 of the World Bank (WB) and the International Finance Corporation (IFC),
The stakeholders reached a consensus on the reform initiatives in areas of taxation.
“Multiple authorities (income tax, customs and VAT) should not conduct audits several times. The NBR will have to consider conducting single joint-audit on the basis of a unified audit module, and develop an inter-operative system,” the action plan said.
The NBR will have to develop a common database for income tax, customs and VAT authorities.
Besides, business entities will have to follow the International Financial Reporting Standards (IFRS) model to prepare their audit reports, it added.
According to the action plan, the NBR will have to issue a circular to reduce the number of corporate tax audits based on the risk profile of a business.
The NBR will have to issue circular to mandate e-filing and e-payment of taxes for individuals and businesses by fully operationalising its existing online system.
According to the action plan, the tax authority will get 12 months time to implement seven major reforms, while 24 months for the two others.
Of the measures to be implemented within 24 months, the NBR will have to introduce single interface for all taxes, and enact draft direct tax code (2013) to update and simplify direct taxes on personal and business incomes.
The representatives of the WB, the BIDA, the National Board of Revenue (NBR), the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the Metropolitan Chamber of Commerce and Industry (MCCI), and the Dhaka Chamber of Commerce and Industry (DCCI) were present at the meeting.
The BIDA has recently sent the action plan to the high-ups of the NBR and other government agencies concerned to take necessary actions thereon.
It has requested the NBR to implement those measures within a given timeframe, and give a feedback on it by this month (July).
The BIDA has decided to start implementing the action plan by December 2019, targeting the EODB Report 2021. It would collect evidences on outcome of the reform initiatives by January-February 2020.
By March-April 2020, the BIDA would complete survey on outcome of the reforms to show improvement to the WB.
The BIDA has prepared the action plan on the basis of 314 globally accepted reform plans in the EODB 2018 report.
According to the plan, the NBR will have to develop risk profile of businesses, and make audits more efficient through a developed risk management system.
In the action plan, the BIDA has given examples on how countries like Thailand, Vietnam, Mozambique and Egypt have improved their paying tax indicator in the EODB report.
Thailand has made tax payment process easier by enhancing its online platform for calculating and filing corporate income tax.
Vietnam has made tax payment easier by abolishing the requirement of VAT returns’ hard copy submission, and by allowing joint payment of business license tax and VAT.
Vietnam also made paying taxes less costly by reducing the portion of employers’ contribution to the labour fund.
Egypt has made paying taxes easier by extending VAT cash refunds to manufacturers in case of capital investment.
Mozambique has done it by reducing mandatory carry-forward period for taxpayers. In that country, VAT cash refund period has been cut down to four months from 12 months.
(FE)
