Different multinational companies and individuals are dodging tax worth almost Tk 5,980 crore in Bangladesh, says Tax Justice Network, an independent international network group’s report.
Tax Justice Network (TJN) released the report titled ‘The State of Tax Justice-2020: Tax Justice in The Time of COVID-19’ where it mentioned that the amount of the dodged taxes is equivalent to four lakh nurses’ annual wages.
TJN is a London-based organization focused on research, analysis and advocacy in the area of international tax and financial regulation, including the role of tax havens.
According to the report, profits and assets have been transferred to various tax havens through tax evasion of $70.34 crore (Tk 5,980 crore) annually through multinational companies and individual taxpayers.
A tax haven is generally an offshore country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment.
Of this, the share of multinational companies is Tk 5,730 crore and the share of individuals is Tk 250 crore, the report showed.
The amount of tax evasion is 3.5 percent of the total tax revenue of Bangladesh.
According to the report, the equivalent of $427 billion in tax evasion across the World goes to countries with zero or very low taxes (in the tax haven) every year.
This amount is equivalent to the annual salary of about 34 million nurses, it said adding that the amount of tax evasion per second is equal to one year's salary of a nurse.
Multinational companies have evaded $1.35 trillion a year by shifting their profits to zero or low-tax countries instead of their parent companies, evading $245 billion in taxes.
Individual taxpayers have saved $10 trillion of their wealth in these countries to avoid taxes or to pay much less, through which they have been able to avoid $182 billion in taxes in their own countries.
Alamgir Hossain, member (income tax policy) of National Board of Revenue (NBR), said the Transfer Pricing Act has been enacted to prevent tax evasion by multinational companies and a cell of the NBR is working on the issue.
Aminur Rahman, a former member of the NBR (income tax policy), said “To evade taxes from Bangladesh, profits and assets can be transferred to different tax havens.”
He said this trend cannot be stopped only by transfer pricing law.
Adequate data needs to be collected to prevent this, he added.
Dr Zahid Hossain , former lead economist of the World Bank Dhaka office, said the companies are taking advantage of very low taxes or no taxes in different countries.
Many countries are offering citizenship with investment opportunities, he said adding that the result is an unhealthy competition.
“As a result, emerging countries are being deprived of taxes. It is not possible to solve this problem nationally,” he mentioned.
Initiatives can be taken to resolve this through the formation of a multilateral body such as the World Trade Organization, he informed.