The National Board of Revenue (NBR) is set to introduce the Alternative Dispute Resolution (ADR) system next fiscal year to ensure recovery of the Tk 8,000 crore stuck in lengthy court procedures.
“We will be able to settle issues out of court and collect dues from the disputed cases thanks to the ADR system,” said Nasiruddin Ahmed, chairman of NBR.
“We met the law minister and discussed the matter with the Law Commission on Monday. The commission is now reviewing structures practised in different countries, including India, Pakistan and South Africa."
The NBR chief said the ADR system is likely to be approved through the finance bill for 2010-11.
ADR is an out-of-the-box legal framework that enables authorities to resolve cases through mutual understanding and across the table negotiations. In this system, both parties compromise on certain aspects to strike a balance.
At present, around 20,000 NBR-related cases, involving around Tk 8,000 crore in revenues, are pending with courts.
In response to queries over whether ADR can lead to a loss of a significant amount of revenue, as the process involves sacrificing some legal taxes in exchange for quick resolution of the cases, Ahmed said: “It will be better than the present situation.”
"Many tax cases have been pending with the Higher Court for decades without any result, which makes us miss out on huge revenues every year,” he said. “Besides, there is no time frame for these cases that further complicates the situation.”
“We need to develop our own resources and expertise to rescue dues. Initially, we may need to engage experts from the private sector, who can help us negotiate in collecting VAT, customs duties and income taxes from the disputed cases,” he said, explaining the way out.
Ahmed said the board is set to start talks with stakeholders, including businessmen, civil society and present and former revenue board officials in March to shape up a flawless ADR system.
NBR identified 620 major cases pending with its customs, income tax and VAT departments, of which around 200 income tax cases account for nearly a quarter of the total dues.
In addition, the government moved to set up two dedicated benches at the High Court Division to try tax-related cases, which is likely to come into effect from April, Ahmed said.
Initially, 600 tax-dodge cases will be placed at these two benches.
The government has been trying to resolve tax related disputes for many years now, and formed several bodies, including the 'tax settlement commission' in 1994 and 'tax ombudsman' in 2005 to settle disputes.