Tortuous rules dealing with tax evasion up for a change

Tax intelligence seeks to create a legal window for taxpayers to pay their evaded taxes, detected by the taxmen, in a simpler way without having to pass through a tortuous process.

The Central Intelligence Cell (CIC) under the National Board of Revenue (NBR) has found out that in majority of the cases the tax-dodgers admit to the CIC’s demand on tax-evasion.

In a recent letter, CIC Director-General Md Belal Uddin proposed to the income-tax-policy wing for incorporating a provision styled ‘agreed disclosure’ into the existing income-tax law.

In the letter, Mr Belal said many of the taxpayers often express their willingness to pay the due tax and amend tax returns to close the entire activity of CIC and fix tax-related disputes instantly.

The CIC found the process-starting from detection of tax evasion to disposal of cases at circle stage-a time-consuming one.

“Many of the taxpayers felt quite embarrassed and psychological pressure with this long-drawn process of tax realisation. They want to pay tax instantly and close the issue,” the CIC said.

The taxpayers do not feel comfortable to attend hearing again at the tax-circle offices on the issue of concealment of income or wealth as they attend such hearing in CIC first, it said.

Many of the taxpayers earlier had suggested that the tax authority incorporate such provision to expedite the process.

“The CIC found the recommendation justified to consider the tax- evasion cases as ‘settled’ for the taxpayers who agreed with the facts found by CIC and willing to pay the demanded taxes,” the CIC letter reads.

The CIC proposed to include the provision ‘agreed disclosure’ in the existing tax law after analysing the experiences of other countries and in the context of Bangladesh.

Two parts of the provision comprise agreed disclosure form and amended return.

Taxpayers will have to sign a form to discuss with the CIC. The form will have information relating to amendment of tax returns, wealth statements and expenditure statements.

There will be revised net income and amount of net payable taxes, process of payment of additional tax that arises due to amendment of tax returns.

Taxpayers will have to submit the form to the CIC for its approval. They will be able to submit the amended tax returns under the provision of ‘agreed disclosure’ by obtaining CIC’s consent.

The amended tax returns also need consent of the circle offices of income-tax wing to complete the assessment on revised income, wealth or expenditure.

Majority of the evasive taxpayers usually agreed to pay tax after the CIC unearthed the evasion after thorough investigation.

CIC usually instructs taxpayers to attend a hearing, searches bank accounts, freezes transaction and goes for further action in case of non-compliance.

But, the wing initiates such penal action being confirmed with relevant evidence about the concealment of income and evasion of taxes thereon.