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Gross mismatch between the number of registered companies and that of corporate income-tax receipt by the exchequer persists, as the tax returns submitted annually by the former continues to be disproportionately low in Bangladesh, official statistics show.
Only nearly 40,000 companies file tax returns in Bangladesh while the number of registered companies is over 0.3 million.
Some 0.1 million companies are currently active and submitting audited statement and board-of-directors lists to the entity, says AKM Nurunnabi Kabir, Registrar of the Joint Stock Companies and Firms (RJSC).
National Board of Revenue (NBR) data show the number of corporate-tax returns as 39,659 in the financial year (FY) 2024-25, growing year on year by 4.0 per cent. It was 38,130 in FY 24 and 33,905 in FY 23.
Two government entities-- the National Board of Revenue (NBR) and the Registrar of Joint Stock Companies and Firms (RJSC)-- have data on how many companies file tax returns and how many are registered with the government to do business.
Corporate taxes are the major sources of government domestic revenue.
Existing taxpayers allege that they are subject to scrutiny and harassment every year while the tax authority has less attention to expanding tax net to collect revenues from potential taxpayers and disperse the burden on them.
Earlier, several steps to reconcile the data were taken but none saw any visible outcome yet.
The gap analysis has never been done by any of the governments seriously.
In 2020, the Institute of Chartered Accountants of Bangladesh (ICAB) introduced Document Verification System (DVS) as a decoy to check forgery on financial statements of the companies.
It has a Memorandum of Understanding with the NBR under which no tax officials would allow audited financial statement without document -verification code, issued by the ICAB.
ICAB President NKA Mobin has said so far 58,000 companies have obtained DVC for tax-return-submission purposes.
"I have no idea why they are not filing tax returns," he told the FE writer.
He stressed the need for reconciling the data at least once a year to know whether the government is losing out revenue through this mismatch.
Chairman of the NBR Abdur Rahman Khan said, "It's true corporate-tax returns are not increasing but reconciliation with RJSC or ICAB data may not yield much result."
Some of the companies are recognized as individual taxpayers while some of the ICAB -audited taxpayers are not bound to file tax returns, he points out.
The RJSC Registrar, Mr Kabir, says only one lakh companies are now functional out of the registered ones.
"We are trying to omit the defunct companies every month, but many of them are not in favour of delisting," he says, explaining that the companies have still hope to resume operation.
Some of the RJSC-listed companies are yet to start their operations.
"It's difficult for RJSC to follow up each of the companies' financial health, but every year it is cleaning up some of the defunct companies," he told the FE.
Each of the registered companies has to submit an audited statement on financials and names of the board of directors every year.
In case of failure, RJSC can impose penalty for the non-compliance.
Financial Reporting Council (FRC) chairman Md Sajjad Hossain Bhuiyan has said the council is going to send a letter to the RJSC seeking status of the companies and how many of them are filing company returns there.
"We would review why this gap between tax returns and RJSC companies and how to bridge those," he added.
He said the council was not active earlier to see corporate -reporting compliance, oversee the activities of auditors and audit firms.
However, the number of individual taxpayers also grew faster due to several efforts to widen tax net.
As per tax laws, all companies have to submit tax returns, irrespective of profit or loss, every year, showing their income, asset and expenditures.
"Even, loss-incurring companies are required to pay turnover taxes every year."
The NBR chairman said many autonomous bodies are audited by CAs but they do not require filing tax returns.
Sole-proprietorship taxpayers are listed as companies in RJSC but they are filing tax returns as individual taxpayers as per tax law, he added.
He, however, acknowledges operational inefficiencies as one of the reasons for poor tax base.
The NBR chairman said, "It's easy to open companies but its dissolution is a costly and time -consuming process."
The ICAB president said in case of reconciliation, it's difficult to know whether any non-compliance exists in loan or tax-return filing without DVC.
"At least 58,000 corporate-tax returns must be submitted to the NBR as they have obtained DVC for this purpose," he added.
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