Jasim Khan
The move to form a separate Transfer Pricing Cell at the National Board of Revenue (NBR) to check illicit international transactions is expected to be finalised next week.
A proposal in this connection will be discussed at the next meeting of the NBR which is scheduled to be held on October 21 next, sources said.
The government has started enforcing the transfer pricing legislation on companies with international transactions since January this year.
Transactions of more than Tk 30 million (Tk 3.0 crore) will be scrutinised by the cell, according to the proposal.
Separate officers will also be recruited for the cell who will conduct suspicious transaction audits.
Companies making international transactions with related entities will need to compile transfer pricing documentation and penalties after the legislation is approved.
Plans to implement the legislation were floated last year, following a report by Global Financial Integrity (GFI), a UN concern, on revenue loss in the country.
GFI, a Washington-based firm, in its report said a total of $ 34.12 billion flew out of Bangladesh between the years 1990 and 2008.
A high official of the NBR admitted that there have been allegations that several multinational companies (MNCs) evade tax through the technique of transfer pricing in four ways that include capital flight, under-invoicing, transfer of dividend and profit shifting to permanent establishments (PEs).
He said the NBR officials are not empowered to restrict the MNCs which send their profit, earned in Bangladesh, to their PEs or parent companies. It is one of the major sources of tax evasion.
Sources said more than 60 per cent of the global transactions are made between related parties.
The existing income tax ordinance of 1984 does not have any clear direction to check tax evasion through transfer pricing.
The tax officials say the NBR will incorporate the provision in the direct tax law-2012 for checking tax evasion through transfer pricing.
A source in the board said since transfer pricing is a new concept in the country's tax regime, an exclusive cell, manned by officers having specialisation in the subject, is required to administer the law properly.
The official said for example, if an assessing officer, in the course of regular assessment, comes across cross-border transactions that require further examination, those matters could be referred to the cell.
According to the proposal the cell will incorporate a clear provision in the new tax law -- 'direct tax code-2012' -- under which taxmen will be empowered to check tax evasion by using the technique.
According to a study of Centre for Policy Dialogue (CPD), Bangladesh is the fourth among the 29 countries that lost US$ 359 million in tax in 2005-2007 period due to transfer pricing.
The move to form a separate Transfer Pricing Cell at the National Board of Revenue (NBR) to check illicit international transactions is expected to be finalised next week.
A proposal in this connection will be discussed at the next meeting of the NBR which is scheduled to be held on October 21 next, sources said.
The government has started enforcing the transfer pricing legislation on companies with international transactions since January this year.
Transactions of more than Tk 30 million (Tk 3.0 crore) will be scrutinised by the cell, according to the proposal.
Separate officers will also be recruited for the cell who will conduct suspicious transaction audits.
Companies making international transactions with related entities will need to compile transfer pricing documentation and penalties after the legislation is approved.
Plans to implement the legislation were floated last year, following a report by Global Financial Integrity (GFI), a UN concern, on revenue loss in the country.
GFI, a Washington-based firm, in its report said a total of $ 34.12 billion flew out of Bangladesh between the years 1990 and 2008.
A high official of the NBR admitted that there have been allegations that several multinational companies (MNCs) evade tax through the technique of transfer pricing in four ways that include capital flight, under-invoicing, transfer of dividend and profit shifting to permanent establishments (PEs).
He said the NBR officials are not empowered to restrict the MNCs which send their profit, earned in Bangladesh, to their PEs or parent companies. It is one of the major sources of tax evasion.
Sources said more than 60 per cent of the global transactions are made between related parties.
The existing income tax ordinance of 1984 does not have any clear direction to check tax evasion through transfer pricing.
The tax officials say the NBR will incorporate the provision in the direct tax law-2012 for checking tax evasion through transfer pricing.
A source in the board said since transfer pricing is a new concept in the country's tax regime, an exclusive cell, manned by officers having specialisation in the subject, is required to administer the law properly.
The official said for example, if an assessing officer, in the course of regular assessment, comes across cross-border transactions that require further examination, those matters could be referred to the cell.
According to the proposal the cell will incorporate a clear provision in the new tax law -- 'direct tax code-2012' -- under which taxmen will be empowered to check tax evasion by using the technique.
According to a study of Centre for Policy Dialogue (CPD), Bangladesh is the fourth among the 29 countries that lost US$ 359 million in tax in 2005-2007 period due to transfer pricing.
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