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Remedies:

1. Social awareness program: Awareness raising program must be created to make


people realize the importance of tax, VAT and other duties for the survival and
development of an economy. Apart from the NBR, it must be ensured that the tax
payers should be free from various complications and harassments in tax offices while
coming to pay taxes. The NBR in alignment with the government concerned
department can initiate motivational campaign in raising consciousness explaining
how regular payment of taxes serves the country and ensures justice in the society.
This can be done not only by appropriate NBR personnel, educational campaigns and
by seeking support and co-operation from professionals like chartered accountants,
tax lawyers, etc. A strong fiscal and financial discipline in all the government
departments, agencies or enterprises may increase its legitimacy. People must
encourage regional and other types of co-operation among tax administrators to
reduce the extent of tax evasion by individuals, domestic and transnational
corporations. This may be achieved by arranging frequent meeting, seminars,
education program for taxpayers, exchanging information, etc.

2. Wide tax base: Tax revenue could be maximized by widening the tax base while
keeping the tax rate low. Presumptive tax on professionals such as accountants,
lawyers, doctors, engineering and management consultants, may be brought to the tax
net. Certain tax administration measures, such as selectively increasing the audit
frequency and audit thoroughness for upper bracket tax payers and for hard to catch
individuals, firms or professionals such as doctors, lawyers, etc., use of cross
checking procedures in line with other social or economic indicators of the assesses
may be used to re-fix the presumptive tax pointed out earlier.

3. Special monitoring team for excise and turnover taxes: It presumes that the
business houses and industrial firms are engaged in tax evasion in a significant scale.
The success of government machinery for revenue collection is largely relied on
administering the gamut involves in collection process, NBR policies and the honesty
of the taxpayers. Although cigarette, bidi, chanachur, juice, energy drink and M.S
products are precluded from cottage industries facilities is an appreciable step but
policy formulation is not enough to plug the loopholes of the perpetrators movements.

4. Restructuring custom duty net: Halting evasion of tax by means of under


invoicing, proper valuation of should be placed at most important custom centers of
the country. The present custom net is too poor to fish many cross borders trade. Tax
evasion by multinational companies through transfer pricing is a global phenomenon.
Revenue people in many countries including USA, India have been given special
power and training to examine extensively the transfer pricing mechanism of those
companies. In this country too, there is possibility of tax underreporting through this
mechanism.

5. Simplified Income Tax system: The present income tax system is too complicated
to understand. Chartered accountants, tax lawyers and related professionals often
allegedly are abusing this complexity. Their dubious roles as middle man help
underreporting many income tax cases. People are likely to go for self-assessments
are discouraged by the difficult system. The problem is more acute in a poor economy
like ours with high illiteracy and poor record keeping and accounting habits. The
demands placed on administration- very poorly staffed with poor pay and inadequate
logistics support have probably resulted in greater dishonest practices than would
have been the case otherwise. However, the current fiscal policy has proposed to
introduce e-tax filing11, e-tax calculator on NBR web etc.

6. Penalty and Reward: High penalty rate should be introduced to discourage


evasion. The penalty rate should be progressively higher with the amount of tax
evaded and must also represent the current market conditions. At present, the
provision of penalty in the statute books is one sided. The tax payers only to be
penalized for an act of omission or default but there is no corresponding provision to
penalize dishonest, inefficient or unjust tax officials . Moreover, there is very little
reward for them who pays taxes regularly and on time. Highest taxpayers or tax
payers above a specified bracket are proposed to be awarded with a tax card providing
civilian VIP status in all state programs and public facilities.

7. Standardization of public utility price: The policy of taxation and user charges
for services provided by nationalized state enterprises, i.e., PDB, WASA, DESA, etc.,
should be well formulated. The latter when based on standard marginal pricing would
collect more revenue and would generate less resistance by the tax payers. The result
may be low income tax rate and lesser tax evasion.

8. Updating Anti-evasion Provisions in the ITO, 1984: Income Tax Ordinance 1984
was equipped with supposedly adequate legible provisions to tackle concurrent tax
underreporting-evasion and avoidance, and penal provision for purported taxpayers.
Section 19 deals with unexplained investment, Section 115 for detecting concealment,
Section 123-124 deal with imposing penalty for tax evasion and chapter XXI for
offences and prosecution. Special provisions are incorporated in Section 93, 104 and
106 for escaped income assessment or non-filing tax return; and Sections 117-
119empower NBR officials to raid, search, seize and retain the concealments of
bullion or valuables required to be disclosed under the ITO, 1984. But long standing
these provisions cannot be befitting of all time or age. For example, new cyber tax
laws to book transactions through e-banking, e-commerce, and web-capital market
etc. is a demand of time. The ITO 1984 offers a variety of exemptions and incentives
and their continuation and misuse erode the tax base.

Conclusion
Tax evasion is a severe crime that deprives a country from its available sources of
revenue and as a consequence pushes its economy toward inflation. Corporate tax payers
are more involved in this crime than individual tax payers in Bangladesh as a result our
inflation rate has been in double digit. Government is trying to motivate tax payers in
paying the appropriate amount of tax but unethical tax payers are always finding out the
loopholes that exist in our current tax policy and continuing their tax evasion practice
with pride. As a citizen of a poor and less developed country, we, the people who
know about the tax, should try to be honest in giving the tax properly. Moreover our
duty is to aware and encourage others to do this. The existing tax structure should be
tailored to the attainable efficiency in tax administration. While preparing annual
budget, this point deserved special attention to keep government expenditure within
tax collection efficiency of tax officials. Otherwise, arbitrary targets to collect tax
revenue when imposed make them running wildly to fulfill the target which ultimately
destroys theirs and tax payers confidence in tax administration. . It is recommended
to the NBR to ensure efficiency, transparency and accountability in the revenue board
to help boost tax collection.
5.1 Bibliography/References
1.Bangladesh Income Tax. Theory and practice. (.Nikhil Chandra Shil, Md. Zakaria Masud
& Md. Faridul alam)

2. Hussain, Mustafa Tariq. (1997). Direct Taxes in Bangladesh

3. Peoples Republic of Bangladesh. (1977). Income Tax Manual

4. Metropolitan Chamber of Commerce and Industry. (2006). Summary of Taxation Rules in


Bangladesh

5. National Board of Revenue. (1997). Income Tax Manual: The Income Tax Ordinance

6. Income Tax Incentives (2005, July 26).

7. Khan, Abu Sayed. (2005, May 5). Investment in Bangladesh. Nov 12, 2006,

8. McGee, Robert W. (2006). Ethics and Tax Evasion in Asia, AIB South East Regional
Conference, Bangkok, (7-9 December).