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Checking payroll status of foreign workers appointed in Bangladesh begins October 15, the deadline set by government's revenue authority, with a provision of spot penalty for tax-evasion.
Officials said the National Board of Revenue (NBR) had issued the ultimatum to the employer-companies and individuals to put their respective foreign employees on payroll after having compiled information of tax-dodging by the latter.
A taskforce of the NBR would visit some select companies to detect the unlawful acts and take punitive action, if found non-compliant, after the given timeframe, they said.
"The NBR has already gathered some information about appointment of foreigners illegally and that they are still out of tax net," says an urgent notice, issued Sunday.
The notice has been issued for the employers -- companies or individuals -- for a review of tax-payment status of their respective foreign employees through spot checks.
"As per existing rules, the companies will have to appoint the foreign workers or employees with prior approval from the Bangladesh Investment Development Authority (BIDA) or former Board of Investment (BoI)," it added.
According to the income tax ordinance 1984, it is a punishable offence to appoint foreign nationals without such approval.
Taxmen can withdraw tax-holiday facility and other exemptions enjoyed by the companies or impose up to Tk 0.5 million or 50 per cent of the payable tax, whichever is higher, as penalty if a company or individual appointed foreign employees without prior approval from the BIDA/BoI and evading tax.
There is also provision of imprisonment up to three years for the offence.
Penalty for appointing illegal foreign workers has been incorporated into the Finance Act 2015 that came into effect on July 1, 2015.
The taskforce will visit some of the employer-companies of foreign nationals, after the given deadline, NBR member (tax legal and enforcement) Md Serajul Islam told the FE Monday.
"We have requested them to comply with the existing law within the given timeframe," he said.
There are some 14,000 foreign taxpayers in the country who have Taxpayer Identification Number (TIN), Mr Islam said, adding that the taskforce has no idea how many foreign employees are working in the country but not paying tax.
"We have asked the employer companies, not foreigners, to bring their foreign employees under tax net," he said.
The NBR wants to deal with the issue softly but intends to inspect some of the employers, he added.
"We expect the employers will comply with the rules after the issuance of notice," he added.
Earlier in 2015, the NBR asked the country's leading chambers and businesses not to appoint or employ illegal foreigners to avoid heavy penalty by the taxmen.
The income-tax wing of the board has sent letters to the apex chamber -- the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) --Metropolitan Chamber of Commerce and Industry (MCCI), Foreign Investors Chamber of Commerce and Industry (FICCI), Bangladesh Chamber of Industry (BCI), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) with the details of the provisions of penalty.
According to the Income Tax Ordinance 1984, a foreign national needs to open tax file if he or she lives in the country for three months or 90 days a year.
They also need to present their tax-clearance certificates from the NBR while crossing the immigration check-posts before leaving the country.
Individual foreign workers are required to pay 30 per cent tax on their income. There is no tax ceiling for individual non-resident foreign taxpayers in Bangladesh.
Tax officials said foreign workers are increasing in the country but tax- payment scenario is poor compared to their earnings and salaries.
Many of foreign workers evade taxes with the help of their employers as they stay on temporary basis by renewing work permit every three months to dodge compliance with the law, they alleged.
Majority of the foreign nationals in Bangladesh are found to be from India, Pakistan, Sri Lanka, Korea and China.