Traders often import goods on false declarations, says NBR chairman

The National Board of Revenue, or NBR, Chairman Abdur Rahman Khan has said many customs-related complications remain unresolved as traders continue to import goods with false declarations.

He said this in response to a complaint from traders regarding customs duties, raised on behalf of customs officials, during the NBR's pre-budget discussion with the Metropolitan Chamber of Commerce and Industry, or MCCI, and the Foreign Investors’ Chamber Of Commerce and Industry, or FICCI, in Dhaka’s Agargaon.

Traders have alleged even though they import goods at low prices, customs officials evaluate them at their discretion, excluding the price on the invoice or list of import prices with goods during clearance.

In response, Abdur Rahman said: “Customs officials, seeing traders consistently bringing goods with false declarations, are trained to be suspicious.

“In an ideal situation, everyone would have their own invoice, but in reality, it’s not like that.”

Highlighting the traders’ failure to provide all transaction information, he said: “Until we can stand on truth and justice, this problem will persist.

“For example, I went to the village last weekend. A man approached me and said, ‘this is my first time bringing goods. This and that, the HS code was wrong. I am being charged a lot of tax. I will pay the tax, just don't fine me.’

"The fine is 200 percent. I saw it was a grave offence when comparing the goods he brought with what he declared.

“He claims it’s his first time importing goods, but if that’s true, evading government revenue on a first import is a serious problem.

“Our traders often don't record all their transactions, leaving a large amount off their accounts. The customs officials know this.

“If they do record everything, they can't bear the tax, so they set some aside.

“Compliant taxpayers are the way they are because they understand the cost of non-compliance is unbearable.

“Once they fall into non-compliance, they won't be able to do business again and these goods will be auctioned.

“With the regular duty plus a 200 percent fine, there’s no way they’ll ever be able to take the goods.”

PROPOSAL TO REMOVE CASH TRANSACTION CONDITIONS

The FICCI and the MCCI claim although the corporate tax rate has been reduced in the past few fiscal years, the conditions for cash transactions are not possible due to the large informal sector in Bangladesh.

In the budget proposal, FICCI Tax Advisor Snehasish Barua proposed removing the cash transaction threshold to optimise the corporate tax rate, reforming tax at source provisions, and gradually abolishing the minimum tax.

He said, “These steps will create a more competitive tax environment, which will later encourage more foreign direct investment inflows.”

MCCI President Kamran Tanvirur Rahman said, “Although the corporate tax rate has been reduced, no one can enjoy this benefit due to the conditions for cash transactions as per the Finance Acts.

“About 80 percent of Bangladesh's economy is informal, and banking dependence is incomplete. Thus, large and medium-sized companies struggle to meet this condition.

"The effective tax rate is also very high, reaching 40-50 percent in some cases due to tax deductions at source and unauthorised expenses.

“Along with reducing the corporate tax rate, reformation of the advance income tax and turnover tax policies is also needed.”

He proposed abolishing the cash transaction condition in corporate tax rates to reduce tax evasions and increase revenue by developing tax administration and implementing automated digital systems.

FICCI President Zaved Akhtar and MCCI Vice President Simeen Rahman participated in the discussion.