Instead of raiding delinquent taxpayers to sniff out undeclared cash, the Bangladeshi government this year sought another approach to increase its collections from those who shirk their tax obligations: it organised an income tax fair. The five-day event, which ended on Thursday, was organised in Dhaka, the capital, and Chittagong by the National Board of Revenue (NBR), Bangladesh's central authority for tax administration. The event, a one-stop destination for the taxpayer and the taxman, was aimed at boosting the number of Bangladeshis who pay tax.
Those who attended were given numbered tokens that were tracked on a central display board. Each token routed a visitor through a panel of tax officials who explained how to calculate the amount of tax payable on income. More than 17,560 first-time taxpayers obtained the taxpayer's identification number (TIN), a 10-digit ID. But the fair also allowed people to file tax returns. In the first four days of the event, 55,707 people filed returns, and the NRB collected taxes worth 1.17 billion taka (Dh61.7 million), said Nasiruddin Ahmed, the agency's chairman.
The end of the tax fair was meant to coincide with the expiry of a deadline for the submission of individual tax returns, but it was extended to Thursday of this week. Dr Mashiur Rahman, the economic affairs adviser to the prime minister, Sheikh Hasina Wazed, inaugurated the fair in the capital and emphasised the need for every Bangladeshi to dutifully pay tax to make the country "self-reliant" and overcome its dependence on foreign aid.
Buoyed by the rush of tax-filers, the government said it would arrange similar fairs in all major cities from next year. "The tax fair generated a very good response," says Sanjay Kathuria, the World Bank's lead country economist for Bangladesh. "Imparting education to the taxpayer is a part of the [government's] multi-pronged strategy in revamping its tax structure." In Bangladesh, as in a number of other south Asian countries, tax evasion is endemic, starving the government of revenue and retarding the pace of economic growth and social development. Tax evasion has also spawned a shadow economy, with most of the country's elite believed to be stashing away wealth in their homes or in foreign banks.
Bangladesh has only 2.7 million TIN-holders out of a population of more than 150 million. And of the small number of TIN-holders, only 757,000 remitted taxes in the past fiscal year, the NRB says. Bangladesh's tax-revenue-to-GDP ratio is 8.5 per cent, the lowest in south Asia. By comparison, Pakistan's tax-GDP ratio is reported to be 10.6 per cent and India's between 17 and 18 per cent. "Tax evasion is a serious problem in Bangladesh", resulting in huge revenue losses for the economy, says Dr AKM Matiur Rahman, an associate professor of business administration at American International University-Bangladesh (AIUB) in Dhaka. For various social and economic reasons, and because of widespread governmental corruption, many citizens "do not believe that paying taxes is a civil and social responsibility", Dr Rahman says.
People fear harassment from tax authorities and avoid them as much as possible, Dr Rahman says, but for many people, evading taxmen to prevent their hard-earned income from falling into the hands of corrupt officials is "a matter of pride". Transparency International's Annual Report 2009, its most recent, ranked Bangladesh at 139, in a tie with three other countries, out of 180 countries on the Corruption Perceptions Index.
This year's tax fair - and those in subsequent years - will use education to address rigid social attitudes against tax compliance, Dr Rahman says. "As a teacher, I find my students are averse to the idea of paying tax in their first class. By the end of the semester, their attitudes change as they understand that tax is a necessary evil in building a nation," he says. In Bangladesh's large, uneducated population, the propensity to evade taxes is compounded by the perceived difficulty of filing returns. The fair was meant to assure first-time taxpayers about the ease of filing returns.
"Many Bangladeshis thought filing tax was a lengthy, bureaucratic procedure," says Mr Kathuria. "But the fair has shown them that it is largely a hassle-free process." But the fair, while targeting the poor and the middle class, will not "induce [Bangladesh's] rich to report their income truthfully", says Faheem Haider, a political analyst in Dhaka. A veil of secrecy shrouds the financial affairs of Bangladesh's wealthy, who own most of the country's taxable assets, he says.
In a country with a self-reporting income tax system - known locally as the Self-Assessment System (SAS) - the rich are not under enough pressure to disclose their hidden wealth. "As a result, the government loses a large share of the revenue it would have gotten had it enforced its tax code," Mr Haider says. In a 2008 research paper released by the AIUB, Dr Rahman and a co-author, Sabera Yasmin, wrote: "Since wealthy people, in general, live in urban area where a least level of dodging can result [in] a huge amount of revenue losses, they mostly use SAS in filing their tax-returns. Therefore, the evasion problem is more severe in urban than that in rural even though over 80 per cent of the population live in rural areas."
Mr Ahmed said recently the ministry of finance was drafting a scheme of incentives for taxpayers in Bangladesh. But that alone may not be enough to remedy the problem. "The poor, who earn less taxable income, are left to bear the burden of the wealthy profligates of the country," Mr Haider says. Between 2005 and 2007, multinational companies trading in clothing and personal accessories, telecommunications equipment, textiles and seafood evaded taxes worth £186m (Dh1.08bn), according to a 2009 study, False Profits: Robbing the Poor to Keep the Rich Tax-free. The study was commissioned by the anti-poverty charity Christian Aid and conducted by Simon Pak, an associate professor of finance at Penn State University.
The companies also illicitly removed £600m of capital from Bangladesh between 2005 and 2007, according to Prof Pak's study. "If the duty rate is low in Bangladesh, [multinational corporations] increase the price of imported goods to fly capital from the country, and if the rate is higher they lower the price to dodge tax,"a senior central bank official told Bangladesh's Financial Express newspaper in April last year.
"Bangladesh has neither expertise nor resources to fight back such malpractice."
business@thenational.ae
SHOW COURTS ORDER OF PLAY
Wimbledon order of play on Saturday, July 8
All times UAE ( 4 GMT)
Centre Court (4pm)
Agnieszka Radwanska (9) v Timea Bacsinszky (19)
Ernests Gulbis v Novak Djokovic (2)
Mischa Zverev (27) v Roger Federer (3)
Court 1 (4pm)
Milos Raonic (6) v Albert Ramos-Vinolas (25)
Anett Kontaveit v Caroline Wozniacki (5)
Dominic Thiem (8) v Jared Donaldson
Court 2 (2.30pm)
Sorana Cirstea v Garbine Muguruza (14)
To finish: Sam Querrey (24) leads Jo-Wilfried Tsonga (12) 6-2, 3-6, 7-6, 1-6, 6-5
Angelique Kerber (1) v Shelby Rogers
Sebastian Ofner v Alexander Zverev (10)
Court 3 (2.30pm)
Grigor Dimitrov (13) v Dudi Sela
Alison Riske v Coco Vandeweghe (24)
David Ferrer v Tomas Berdych (11)
Court 12 (2.30pm)
Polona Hercog v Svetlana Kuznetsova (7)
Gael Monfils (15) v Adrian Mannarino
Court 18 (2.30pm)
Magdalena Rybarikova v Lesia Tsurenko
Petra Martic v Zarina Diyas
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
Challenge Cup result:
1. UAE 3 faults
2. Ireland 9 faults
3. Brazil 11 faults
4. Spain 15 faults
5. Great Britain 17 faults
6. New Zealand 20 faults
7. Italy 26 faults
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The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
All about the Sevens
Cape Town Sevens on Saturday and Sunday: Pools A – South Africa, Kenya, France, Russia; B – New Zealand, Australia, Spain, United States; C – England, Scotland, Argentina, Uganda; D – Fiji, Samoa, Canada, Wales
HSBC World Sevens Series standing after first leg in Dubai 1 South Africa; 2 New Zealand; 3 England; 4 Fiji; 5 Australia; 6 Samoa; 7 Kenya; 8 Scotland; 9 France; 10 Spain; 11 Argentina; 12 Canada; 13 Wales; 14 Uganda; 15 United States; 16 Russia
A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed