Tax Evasion Prevention
Govt mulls bringing DPI under institutional mechanism
The government is weighing up the scope to bring direct pro-forma invoice issuing companies under an organisational mechanism in a bid to prevent tax evasion through under-invoicing in the DPI system, said National Board of Revenue officials. The NBR is now working on ways to bring the DPI issuers under tax net and prevent duty evasion through under-invoicing allegedly made in the system, they said.
Finance minister Abul Maal Abdul Muhith has also stressed getting the DPI issuance bodies registered, added the officials.
A top NBR official on Thursday told New Age that they would discuss with the Bangladesh Bank and the commerce ministry how DPI agents could be brought under the tax net.
DPI is needed for opening a letter of credit for importing goods from other countries.
Exporters or their agents issue DPI in favour of Bangladeshi importers as banks issue LCs based on the DPI in which all kinds of documents related to import, such as quantity and quality of products, unit price and total price of products, terms of payment, shipments and delivery method, are described.
In 1991, the government introduced DPI system in import, letting importers open LCs providing direct pro-forma invoice.
The Import Policy 2012-2015 also allows import through pro-forma invoice.
NBR officials said that though the importers could collect pro-forma invoice directly, international trade is very much difficult without taking any help from any agents as it is quite impossible for the importers to know information related to the products like details of comparative price or which products
were being produced by which country or which company.
Importers take helps from agents in preparing documents relating to DPI issuance but the NBR or other government agencies do not know who the agents are as there is no provision of registration or other legal base for those agents, they said.
The NBR suspects that DPI issuance agents help the importers to evade duties in import through under-invoicing, the officials said, adding that they also laundered money through over-invoicing.
The agents themselves evade taxes as they earn a lot of money but do not pay tax. Even they do not have taxpayer’s identification number, said the officials.
They said that there were other companies known as indenting agents of foreign suppliers who provide services to the importers on behalf of exporters. The indenting agents work to promote and sell the products of foreign companies in Bangladesh market.
By doing so, indenting agents get a certain per cent of total export values from the foreign suppliers and the commission remits in Bangladesh as foreign currency.
Indenting agents have to pay a total of 23 per cent tax from commission earnings.
Considering the circumstances, the finance minister made some recommendations, including mandatory registration system for DPI issuers, to the NBR, Bangladesh Bank and commerce ministry for ensuring accountability in trade, especially import.
-With New Age input
