ABOUT 40 per cent of registered companies do not have taxpayer’s identification numbers in violation of the Companies Act. This suggests a slack monitoring of authorities. There are, as the Office of the Registrar of Joint Stock Companies and Firms records say, 2,75,460 registered public and private limited companies, but only 1,67,100 companies hold TINs and the remaining companies run without TINs. Besides, among the total corporate TIN holders, about 60 per cent are yet to submit tax returns to the National Board of Revenue. What constitutes a further violation of rules and regulations is that multiple companies have registered with the Registrar of Joint Stock Companies and Firms using the same address and a number of businesses have been registered with forged taxpayer’s identification numbers. The Companies Act makes it mandatory for all companies to have valid TINs and submit returns every year along with audited financial reports through the data verification system of the Institute of Chartered Accountants of Bangladesh. But less than 30 per cent of registered companies, as the Institute of Chartered Accountants of Bangladesh says, had their audit reports verified through the system. All this means a loss of a huge amount in revenue.

With the country already having a low tax-to-GDP ratio, stuck at about 9 per cent, the lowest in South Asia, such tax evasion by companies is unacceptable. The blame does not, however, fall squarely on the errant companies that have exploited the weak tax management system to evade taxes. It also falls on the authorities, especially the National Board of Revenue, which has failed to discipline the sector. It beats logic that thousands of companies run without complying with TIN rules and many are registered with forged numbers. Tax revenue losses from non-compliant companies may amount to a few thousand crores. Besides, most multinational companies, which hold TINs and submit tax returns, hide real profits to evade taxes. Bangladesh loses, as the State of Tax Justice 2021 says, $143.96 million in tax revenue every year to global tax abuse by multinational corporations and wealthy individuals only. The report also says that Bangladesh is the third highest in South Asia in terms of tax revenue losses, after India and Pakistan. What is also worrying is that about 60 per cent of all TIN holders, individuals and companies, do not submit returns. Only about 2.3 million of about 6.3 million TIN holders submitted tax returns in the 2022 financial year.

Flawed policies, corruption, no automation of the tax administration and lack of monitoring are to blame for the situation where a large number of companies and rich individuals either remain outside the tax net or evade taxes. The revenue board must, therefore, address the issues and be stringent to make all registered companies comply with the laws while the government must strengthen the tax management system.