The National Board of Revenue (NBR) has taken steps to find out the foreigners working in Bangladesh evading taxes, official said. The move has been made after allegations that some foreign technicians are availing of the tax exemption facility beyond the permissible three-year period by changing work places, said an official source. However, there is no official data on the number of foreign workers employed in the Export Processing Zones (EPZs) and in companies outside of the EPZs.
But sources said a large number of highly-paid foreign technicians has been engaged by local authorities in the country. Officials said such foreign technicians are getting large compensation packages and are often reluctant to pay tax abusing the existing provision of tax-exemption facility.
As per the existing policy, a foreign technician is entitled to enjoy three years of tax exemption, which gets no farther extension. The facility is, however, not applicable to foreign officials working in technology sector.
However, there remains confusion in determining criteria of the foreign workers entitled for tax exemption facility and bringing them under the tax net after expiry of the specified period, the sources said. The NBR has been taking some effective measures to remove such confusions about the determination of criteria, he added. The government has offered tax exemption facility to the foreign technicians to facilitate transfer of technology from developed nations. But, a section of foreign residents, in cooperation with local partners, have been avoiding payment of tax hiding information of their service tenure.
It has been found that some of the foreign workers leave the country for a certain period after expiry of three years tax-exemption tenure and come back to join other companies to get the tax-exemption facility again. The widespread allegation on tax evasion by foreign residents has forced the NBR to scrutinise the matter thoroughly, said a senior NBR official. "The board is planning to assign an investigation committee to assess the annual revenue loss because of the tax evasion," he said.
The board also requested the Bangladesh Export Processing Zone Authority (BEPZA) to monitor the tax related issues of the technicians. In the initial investigation of the NBR, the board recently found that an international oil company (IOC) evaded tax worth Tk 25 million in the last fiscal concealing information on salary of their foreign employers. The NBR is taking action against the company as per existing income tax ordinance, an official source said.
The board recently issued letters to six foreign companies under Dhaka tax zone-6 to provide lists of foreign workers employed by them, an official said. "We will seek such information from all the companies where foreign employees are serving," he said. The NBR is collecting data of total foreign workers employed in the country to have an idea of the amount of tax they are required to pay, the official said. Talking to the FE, NBR Chairman Muhammad Abdul Mazid said: "We will assess revenue losses on account tax evasion by the foreign residents."
The board will check tax evasion by the foreign residents, who draw high salary, but evade tax canceling information about their actual income and working tenure, he said. The board has received specific information about tax evasion by some of those foreign residents, he said. Foreign residents have been abusing the existing provision for tax-exemption, he said.
Leading economist and the research director of Bangladesh Institute of Development Studies (BIDS) Zaid Bakht said: "It is the responsibility of government's concerned authority to check the abuse as no political interference exists now." The present caretaker government should review the issue without delay, he said. "The BoI, earlier, has tried to take stern action against illegal foreign residence, but the home ministry has ignored the matter under political consideration," he said.<!--[if !supportLineBreakNewLine]-->
Terming the situation 'asymmetric', he said: "When our workers go to foreign country's they have to reel under strict procedures." "I am not discouraging participation of foreign technicians in our country, but tax related issues should be strictly monitored for the sake of boosting revenue collection." The Board of Investment (BoI), which is assigned to issue work permit to those foreign residents, also lacks information on actual number of foreign workers. "The BoI issues around 300 work permits per month for the industrial sector, both renewal and fresh," a BoI official told the FE preferring anonymity, but he could not specify the actual number of fresh work permit issuance.
When asked about the allegation about illegal renewal of work permits, BoI Executive Chairman Kamal Uddin Chowdhury said: "I am not aware of this malpractice. So far, I have not received any such allegation." A number of foreign workers have been drawing almost three times higher salary than that of local workers, officials said adding that most of them are supposed to pay income tax in a higher tax slab.