Expanding the tax net  

Bangladesh has a population of more than 160 million, but the number of registered taxpayers (e-TIN holders) is roughly 3.8 million and the number of taxpayers who file returns is about only 1.8 million. These figures obviously are not satisfactory at all.

We have to introduce a system to motivate taxpayers to pay tax voluntarily and create a hassle-free and simplified system to mobilise the internal resources properly.

Many of our citizens are scared of the tax administration and they do not pay taxes just to avoid the tax authority's harassment.

So, the expansion of the tax net has been one of the priority items on the action plan of our tax administration for the last few years. The ultimate goal of the plan is to bring all or most of the potential taxpayers within the fold of tax assessment.

The agenda of expanding the tax net is approached mainly in two ways. First, the tax administration gathers relevant information about potential taxpayers through enquiry or formal surveys and initiates necessary action on the basis of the gathered information. This has produced some positive results but these efforts need to be continued more vigorously.

Secondly, the NBR should take effective measures to create a taxpayer-friendly atmosphere so that taxpayers feel assured of getting just treatment in tax circles. Only then the existing and the potential taxpayers will be genuinely motivated for voluntary compliance, which will contribute to the expansion of the tax net. 

While keeping pressure on taxpayers, tax assessment, payment and related procedures should be simplified. The tax fair obviously raises awareness and encourages taxpayers to submit return in simple form, but this is  not enough.

According to the present system, all tax returns filed under section 82BB as "Universal Self-Assessment" system are subject to audit. However, in reality, some of them are picked up for audit, presumably at random. The auditing system should be streamlined.

Abdul Hamid is additional managing director of Eastland Insurance Company Ltd.

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