The National Board of Revenue (NBR) has moved to establish an automated tax information unit (TIU) with interconnectivity of data banks of other relevant entities to track large financial transactions.
The revenue board will set up the TIU with support of the government of the Netherlands in a bid to check tax evasion.
The information technology-based system of the TIU will help the taxmen unearth undisclosed money to minimise the size of the country's untaxed and grey economy.
Collected data will be cross-checked with furnished information on the tax returns aiming to detect tax evaders.
Tax officials said inadequate information and limited access to the databases of different entities are one of the major causes of tax evasion in Bangladesh.
Recently, two experts of the Netherlands customs and tax administration---Martin Zeptner and Paul Jairath--- held a meeting with the NBR and pledged to extend technical support for setting up the TIU.
A senior tax official said the experts will train some 20-25 income tax officials at the BCS tax academy for running the TIU.
They will also support NBR to design the TIU, its structure and function, he added.
In his budget speech for the fiscal year (FY) 2016-17, the finance minister outlined a plan to establish the TIU by June 2018.
"We have planned to set up the unit within the stipulated time as per the announcement made by the finance minister," the official said.
Following the plan, the NBR earlier communicated with the Dutch government and sought their support for setting up the TIU.
The concept of automated tax management is new in Bangladesh. NBR doesn't have enough idea about TIU's structure and function.
The Netherlands having the most modern and advanced tax information system in the world will extend all necessary supports for establishing the TIU under its official development assistance (ODA) for developing the country's tax administration.
Bangladesh has a poor tax-GDP ratio, below 10 per cent, among the South Asian countries due to persistent tax evasion.
The size of undisclosed incomes is increasing fast due to limited scopes to track the financial transactions.
It has been alleged that a number of rich people still remain out of the tax net or they are evading their payable tax.
The number of wealthy people, who paid wealth surcharge, grew by 6.80 per cent last year.
A total of 11,670 wealthy people having net asset above Tk 22.5 million paid wealth surcharge worth Tk 3.60 billion in the fiscal year 2016-17. In the FY 2015-16, some 10,927 well-off people paid Tk 2.54 billion wealth tax to the public exchequer.
In the FY 2014-15, some 10,152 people paid Tk 2.08 billion wealth surcharge based on their income tax returns.
According to the Income Tax Ordinance-1984, well-off people having net wealth above Tk 22.5 million have to pay wealth surcharge ranging from 10 per cent to 30 per cent of payable income tax on the basis of their net wealth they show in their income tax returns.
Officials said the TIU will have a comprehensive system that will automatically receive and gather information about a taxpayer's financial transactions. These data will be cross-matched with the taxpayer's records to detect a gap between declared and shown incomes.
The TIU will be supervised by a Director General (DG) appointed by the NBR.