The Financial Express

Curbing tax evasion

NBR certificate must to get DTAA benefit

| Updated: July 18, 2018 11:41:59

Photo used for illustrative purpose only. Courtesy: Ken Teegardin via Flickr Photo used for illustrative purpose only. Courtesy: Ken Teegardin via Flickr

Taxpayers will require obtaining clearance certificate from the National Board of Revenue (NBR) for getting any tax benefit under the Double Taxation Avoidance Agreement (DTAA).

Different companies, organisations, individuals or foreign investors will have to obtain the certificate from the NBR's International Tax Wing (ITW) for availing the tax benefit under DTAA, officials said.

Under DTAA, two countries enjoy tax benefits to avoid payment of double tax on the same income. At present, Bangladesh has DTAA with 33 countries across the world.

The new provision of obtaining the certificate for availing tax benefit under DTAA has been incorporated in the Finance Act 2018.

Subsequently, ITW has sent letters to the Bangladesh Bank (BB) governor, managing directors (MDs) of all the commercial banks and the Large Taxpayers Unit (LTU) recently for taking necessary measures.

Talking to the FE on Monday, NBR Member (ITW) Kalipada Halder said the banks will have to ask their clients for submitting the certificate before deducting tax or giving any other tax benefit under DTAA.

"We have requested the banks not to allow anyone to avail tax benefit under DTAA without NBR's certificate," he added.

As per the Income Tax Ordinance 1984, the banks either deduct a certain amount of tax or do not deduct any tax from the taxpayers before sending money abroad.

However, the taxpayers enjoy reduced rate of tax or tax exemption under DTAA with the other countries.

LTU Commissioner Apurba Kanti Das said the taxmen have noticed that some taxpayers are unduly availing tax benefit from the banks using DTAA.

"There are various forms of tax benefits under different DTAA. It varies from country to country. It is difficult for the banks to verify the actual form of tax benefit without the tax officials' authorisation."

Many of the banks are accepting the taxpayers' applications for getting tax benefit under DTAA without NBR's consent, he also said.

It has been alleged that some of the taxpayers have taken the advantage to evade tax by giving wrong information of DTAA.

In the letter to the BB governor, the NBR member concerned underscored the need for intensifying monitoring in this area.

The LTU commissioner said usually the large taxpayers send money abroad under DTAA by paying reduced rate of tax or enjoying tax exemption.

"It will not be any hassle for them to obtain clearance certificate from NBR," he also said.

The banks will have to deduct tax at the rate mentioned in the certificate or follow tax exemption note in the certificate, issued by the tax authority.


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