Sixty-one per cent of corporate taxpayers in Bangladesh failed to submit their income tax returns by the January 31 deadline for returns submission for the fiscal year 2021-22, according to the National Board of Revenue.
Out of the 78,000 corporate taxpayer identification number holders, only 30,000 TIN holders submitted their returns by the deadline.
However, a number of corporate taxpayers applied to the deputy commissioner of taxes and additional commissioner to extend time by two months.
A number of taxpayers alleged that the mandatory provision of submission of the verified audit report of the financial statements through the document verification system, which was introduced in December 2021, was responsible for the delay in returns submission.
However, small-scale companies are facing difficulty in obtaining the DVS-verified financial statements by paying CA fees.
Tax officials feel the necessity of resolving the issue immediately as corporate taxpayers contribute the lion’s share to direct-tax receipts for the public exchequer.
A senior tax official regarding the issue said the corporate taxpayers who had submitted time petitions had to submit their tax returns by May 15 to avoid penalty.
The NBR signed an agreement with the Institute of Chartered Accountants of Bangladesh to ensure a single audit report for a company in order to check tax evasion.
So far, 25,576 companies have obtained codes from DVS but all are not for the purpose of tax-return submission.
The DVS is needed for different purposes, including audit for non-government organisations, obtaining loans, donor assistance and trade licencing.
ICAB members audit some 10,000 to 12,000 financial reports.
Though the submission of CA-audited financials is mandatory in the income-tax law, the practice of submitting fake and fabricated statements has been going on for years, causing losses of tax revenue.
Income-tax-return submission is mandatory for all companies, stating their annual income, expenditure, asset and other details.
Although the number of tax-registered companies as well as corporate-tax collection has grown sharply since 2013, return-submission trend remained low, showing a dismal state of corporate-tax compliance in Bangladesh compared with many other countries.
According to the data available since fiscal year 2013-2014, such low-rated corporate-tax-return submission has continued for years.
However, the number of corporate TIN-holders grew by 114.66 per cent in the past fiscal year but the returns submission did not show any jump of that scale.
The number of corporate TIN-holders is now 1.67 lakh.
Taxpayers also said that high cost of corporate-tax compliance, the complex manual process and hassle of submission of a huge number of papers with tax returns discouraged submitting tax returns.
Currently, corporate taxpayers are required to submit 26 types of documents, mostly in manual forms, in a year to the tax department.