TAX EVASION AND TAX AVOIDANCE IN

BANGLADESH

DEFINITION OF TAX EVASION

Tax evasion may be defined either as the

understatement or concealment of taxable object or

as the failure to pay tax in time either by the

assesse or the his agent.

DEFINITION OF TAX AVOIDANCE

Tax avoidance is the minimization of tax liability by

the tax payer or his agent by efficient tax planning.

REASONS FOR TAX EVASION AND TAX

AVOIDANCE

i. Ambiguity in tax rules

ii. Low tax moral

iii. High tax rate

iv. Low quality of service in return for taxes

v. Inadequacy of preventive measures

vi. General tendency

vii. High level of corruption

viii. Weak enforcement of tax laws

COMMON METHODS OF TAX EVASION

i. Cash sales

ii. False expenses

iii. Concealment of additional sources

iv. Forgery in documents

v. Maintenance of duplicate records

COMMON METHODS OF TAX AVOIDANCE

i. Transfer of property with bad motive

ii. Transfer of property to trust

iii. Setting up private limited company for tax

avoidance

iv. Window dressing transactions

PREVENTIVE MEASURES ADOPTED IN

BANGLADESH

i. Avoidance of tax through transaction with non-resident (sec. 104)

ii. Avoidance of tax through transfer of assets to non-resident (sec. 105)

iii. Avoidance of tax by transaction in securities (sec. 104)

iv. Tax clearances certificate for persons living Bangladesh (sec. 107)

v. Collection of information by tax authority (sec. 108-110)

vi. Restriction on transfer of assets (sec. 116 A)

vii. Identification of assesse on national basis (sec. 184 B)

viii. Temporary TIN for person who has not applied for TIN

ix. Reward for providing information (sec. 184 D)

STRATEGIES TO PREVENT TAX EVASION AND

AVOIDANCE

i. Social awareness program

ii. Broad band tax net

iii. Special watch-dog for excise and turnover

taxes

iv. Reengineering custom duty net

v. Simplified income tax system

vi. Penalty and reward

vii. Standardization of public utility price

viii. Updating anti evasion provision in the ITO,

1984

MODERNIZTION PLAN OF NATIONAL BOARD OF

REVENUE (2011-2016)

Overarching Goals:

1.Reach a tax-GDP ratio of 13% by 2016;

2. Provide exemplary customer service to all

taxpayers through a web enabled tax

administration from e-registration, e-filing of tax

returns to e-payments/refunds by 2016; and

3. Reduce the tax pendency in the courts by 80%

by 2016.

PROVISIONS OF PENALTIES IN BANGLADESH,

ITO 1984

Penalty for not maintaining accounts in

prescribed manner- Section 35(2).

Penalty for failure to file return, etc- Section

75,77,89(2),91(3) or 93(1).

Penalty for concealment of income.

Penalty to be without prejudiced to other

liability.