The Institute of Chartered Accountants of Bangladesh (ICAB) has said that a large number of foreign nationals are working illegally in various industries and businesses in Bangladesh. According to a report published by the Transparency International Bangladesh (TIB) in February 2020, some 2.50 lakh foreign nationals are working in the country. Of them, 90,000 are legally employed.
The government does not get tax on income. Rather, valuable foreign currency is being smuggled out of the country. The organization has recommended the cancellation of tax benefits and bond benefits, including financial penalties, against organizations employing foreign nationals without the approval of the appropriate authorities.
They made these recommendations while participating in the pre-budget discussions for the fiscal year 2021-22 with the National Board of Revenue (NBR) at the Revenue Building meeting room at Segunbagicha in the capital on Sunday.
NBR Chairman Abu Hena. Rahmatul Munim presided over the meeting.
ICAB President Mahmud-ul-Hasan Khasru said that the institutions are hiring foreign nationals without the approval of the authorities. He recommended imposing fines on them, reducing tax benefits and abolishing existing bond benefits altogether. At the same time, he proposed to keep the NBR under strict surveillance of foreign nationals coming on business visas.
Proposing to amend the new provision in the definition of Permanent Establishment (PE), Mahmud-ul-Hasan Khasru said that according to the dual tax agreement, if the implementation period of a project lasts more than 183 days, the position of the foreign company in Bangladesh becomes PE. It has been observed that in order to avoid the PE issue, foreign companies send their workers to Bangladesh in turns for a short period of time. So that the stay period of any worker in Bangladesh alone is not more than 183 days. In this way, the companies employing foreign workers are evading taxes.
He proposed to amend the definition of PE to prevent tax evasion on the issue of stay of foreign workers.
ICAB has made 44 proposals on income tax, 21 on VAT and 5 on customs for the next 2021-22 financial year.
The ICAB president said the next budget should be designed to encourage investors to further improve their ease of doing business. He proposed to reduce the corporate tax rate by 2.5 per cent for all listed and unlisted companies in the capital market except banks and other financial institutions, phone companies and tobacco companies.
The organization claims that if the corporate tax rate is reduced, Bangladeshi companies will be able to compete more. This will make it easier to develop the country’s economy as well as attract foreign investment.
At present, the corporate tax rate for unlisted companies is 32.5% and for listed companies it is 25%.
In the case of Value Added Tax (VAT), the ICAB proposes to adopt a central registration and amend the existing tax payment system.
In addition to ICAB on Sunday, the Institute of Cost and Management Accountants of Bangladesh (ICMAB), C&F, Freight Forwarding, Tax Advocates Association and entrepreneurs from the Electronics and Electricals, Computer, ICT and Telecommunications sectors took part in the pre-budget discussions.