November 16, 2020: The allegations of widespread tax evasions are nothing new in connection with the export and import related business for a long time across the world. However, thousands of exporters and importers of the country are dodging tax by declaring false statement regarding their goods and commodities in Chattogram and other ports. This siphoning is depriving the government exchequer of huge amount of revenue each year.
Even the National Board of Revenue (NBR) has been concerned for dodging tax and duties through under-invoicing, over-invoicing and declaration of false investment, NBR sources said. An organized syndicate with the nexus of some unscrupulous customs officials, port staff and C&F agent men are committing tax evasion crime acts, they said.
After taking various steps, the customs authority concerned still remains in dark to estimate the amount of dodging tax, they added. In this backdrop, many unscrupulous businessmen also imported high duty based goods through false declaration of low-imposed duty goods via different ports of the country. For example– high taxed polished tiles imported in the name of ceiling boards, 26,000 sq meters valuables jainamaj (cloths used for prayer) under the name of low duty based 12,248 sq meters unfinished sheets, higher taxed valuable cement in the name of low-tax imposed plastic items and higher duty imposed cigarette in the name of foam, said officials of Customs Bond Commissionerate at Chattogram Port.
Besides, “One per cent duty imputed consignment of ‘casing’ electronic item declared instead of 156 per cent duty imputed goods of plastic that was seized by the customs officials in the Chattogram port in the last month, said Chattogram Customs House Joint Commissioner of Audit Investigation and Research (AIR) Sadhon Kumar Kunda.
“A businessman declared his imported goods as gypsum for 60 per cent duty, but it was 150 per cent valued goods tiles that a common cheating formula for tax evasion. Later, a case was filed against M/S N Islam enterprise on charge of tax evasion,” he added. Around 7.0 per cent of L/Cs (letters of credit) have no bill of entry, meaning that a significant amount of imports remain out of records either by the customs and/or the ports, reports the Bangladesh Financial Intelligence Unit of Bangladesh Bank.
This unrecorded imports means either imports without due tariffs (smuggling) or the goods have not been imported at all but the foreign currency has been transferred (money laundering), according to the report.
Another research report of Bangladesh Institute of Bank Management, claimed that around 80 percent trade-based money laundering in the country occurred through under-invoicing and over-invoicing.”
Earlier, World Integrated Trade Solution (WITS) record showed, total imports of Bangladesh was $48 billion in 2015 but Bangladesh Bureau of Statistics (BBS) data shows $40 billion – a difference of $8.0 billion. In addition to money laundering there is evasion of tax. If average total tariff index (TTI) of 50 per cent (VAT 15 per cent, tariff 12 per cent and supplementary duty 23 per cent) is considered, then duties evaded will be $4.0 billion ($8 billion x 0.5). This is 2.05 per cent of gross domestic product or GDP ($4.0 billion/$195 billion) and is significant if compared to total tax to GDP ratio of around 10 per cent.
During the budget speech for FY2020-21, Finance Minister AHM Mustafa Kamal said that there has been widespread allegation of money laundering and tax evasion through under-invoicing, over-invoicing and declaration of false statement.
Affirming the government’s zero tolerance for such misdeeds, the minister said, “I propose to insert a new section in the Income Tax Ordinance to put a rein on such tendencies besides all other existing laws in this regard.” “I hope that the proposed provision will be highly effective in curbing money laundering and tax evasion,” he added.
NBR Chairman Abu Hena Md Rahmatul Muneem, said “All audit reports have been brought under a single database to stop tax evasion by submitting fake financial reports.”
The National Board of Revenue (NBR) and the Institute of Chartered Accountants of Bangladesh (ICAB) have jointly developed a software named Document Verification System, DVS in short, to store the company audited report, said the NBR chairman. Chattogram Port Authority’s Secretary Md Umar Faruq said that they are in dark about the estimated amount of dodging tax in the port.
“If the capacity of the port to enrich then the tax evasion rate to be reduced thru the port,” he added. Jashore’s Benpole Customs House Additional Commissioner Seyed Neamul Islam denied tax evasion in the port, but he said that the revenue decreased due to import of low price goods in recent years.
Benapole C&F Agent Association President Mafizur Rahman said that some businessmen have tendency to evade tax through false declaration. Benapole Export-Import Association Senior Vice-President Aminul Haq claimed that the duty-hike on goods and commodities accelerated the tax evasion tendency among the traders.
Source: Daily Industry news
