NBR to set up tax unit for foreign cos
Credit: New Age
National Board of Revenue has decided to set up a separate unit to handle income tax files of foreign companies operating in Bangladesh.
The decision was taken responding to a proposal of the European Union for establishing a separate NBR unit for providing hassle-free services to foreign taxpayers.
EU came up with the recommendation at the third ‘EU-Bangladesh Business Climate Dialogue’ held in Dhaka last year.
‘In principle, NBR decided to set up a separate unit — International Taxpayers’ Unit — for foreign companies to provide them with better services related to income tax and reduce arbitrary disputes,’ a senior NBR official told New Age on Monday.
Multinational companies, particularly small and medium enterprises, will be benefited from the move while NBR will also be able to prepare a strong workforce on international taxation issues, he said.
It will also be helpful to avoid cases related to disallowances of expenses and support a more business-friendly environment for foreign investors in line with the government’s objectives to attract foreign direct investment, he added.
The new unit will also closely scrutinise the issues related to tax avoidance and capital flight.
NBR is now preparing a proposal for formation of the unit for placing before the finance and public administration ministries by next month.
NBR has already decided to give foreign taxpayers expedited services from the existing income tax zones by dedicated officials.
Earlier, on September 17, NBR appointed senior tax officials at each of 30 income tax zones as focal point officers to provide information to foreign SMEs and prospective foreign investors regarding tax-related provisions, incentives and business process.
Focal point officers across the country will provide one-stop services to foreign investors and taxpayers.
NBR officials said that they would apprise the EU-Bangladesh Business Climate Dialogue, a platform of European Union Business Council and Bangladesh commerce ministry, about the latest move and decision on new tax unit.
The fourth meeting of the forum will be held soon.
Currently, large taxpayers unit (LTU) of the NBR’s income tax wing handles the tax files of large MNCs but other foreign companies, particularly small- and medium-sized firms, files their tax returns with various tax zones located across the country.
All foreign companies including the large MNCs like Grameenphone, Unilever and British American Tobacco will come under the new unit.
According to NBR, some 1,000 foreign companies and other foreign entities are operating their business activities in Bangladesh either directly or through their representative offices, branch offices and liaison offices.
Under the new move, NBR will prepare a strong workforce on international best prices and taxation issues such as base erosion and profit shifting, transfer pricing, thin capitalisation and other tax avoidance schemes which MNCs adopt to evade tax and capital flight, NBR officials said.
Tax officials who are currently handling the tax files of foreign taxpayers across the country, in most cases, don’t have expertise to handle the issues, they added.