Indian high commission seeks solution to tax-related problems

Indian high commission in Dhaka has requested different Bangladesh government agencies including National Board of Revenue to solve a number of tax-related ‘problems’ Indian chief executive officers-managed multinational companies are facing in the country.

In a letter to NBR sent on September 10, the high commission said that Indian CEOs Forum, a platform of Indian CEOs operating in Bangladesh, earlier raised the issues at a meeting with Prime Minister’s Office SDG affairs principal coordinator Abul Kalam Azad.

At the meeting, Indian CEOs claimed that corporate tax rates on multinational companies were becoming unreasonably high due mainly to disallowance of genuine business expenses.

NBR’s assessing officers are disallowing ‘genuine’ business expenses in total disregard to the audited financial statements of the companies, said the letter sent by Indian deputy high commissioner Adarsh Swaika.

The letter claimed that NBR tax officials also arbitrarily determined the revenue and gross margin at higher rates.

Similar letter was also sent to Bangladesh Investment Development Authority, civil aviation and tourism ministry, Civil Aviation Authority of Bangladesh and Bangladesh Land Port Authority as Indian companies have also issues with the agencies.

The letter also claimed that India-based Gulf Oil Bangladesh Limited was facing ‘uneven’ competition with local oil companies due to differences in base value for value-added tax imposition.

Local companies pay VAT based on tariff value declared by the government while foreign companies pay VAT based on actual import prices.
The difference also causes loss of VAT revenue for the government, the letter mentioned.

At the meeting of Indian CEOs Forum with Azad, German-based Bayer CropScience Limited raised the issue of offloading of shares held by the government in the MNCs operating in Bangladesh.

The Indian high commission’s letter said that many MNCs had partnership with the government from the past due to nationalisation policy Bangladesh adopted after the liberation war.

But, there is no clear roadmap from the government in regard to offloading of those shares, it claimed.

It observed that offloading of government shares would allow MNCs to work with full independence and realise the full potential of their continued investment.

Bangladesh Chemical Industries Corporation, a state-run corporation, has 40 per cent shares in Bayer CropScience Limited.

At the meeting of Indian CEOs Forum with Azad, Jet Airways claimed that tax officials were asking the airlines to pay taxes on their surplus funds which were repatriated out of Bangladesh, referring to the recent changes in the tax law.

But, as per double taxation avoidance agreement between Bangladesh and India, profits derived from the operation of aircraft in international traffic by an Indian company would be taxed only in India, it said.

The India-based aviation company also raised the issue of allowing a third party to manage ground handling services at the Hazrat Shahjalal International Airport in Dhaka to improve the services.

Currently, Biman Bangladesh Airlines do the ground handling services for all foreign airlines.

The airlines also requested NBR to settle the ongoing disputes over outstanding VAT on aeronautical charges with Civil Aviation Authority of Bangladesh without penalising the international airlines as CAAB, until two months back, ‘intentionally’ did not issue invoice to the airlines.

Arvind Limited requested that NBR should allow fabric export through the Sona Masjid land customs station as India in last year converted the station into electronic data interchange station to facilitate export-import under bond facility.

CEOs of Bayer CropScience Limited, Gulf Oil Bangladesh Ltd, Jet Airways, Arvind Limited and some other companies attended the meeting.
Senior officials of NBR said that they received the correspondence of Indian high commission and would examine the issues men