July 18, 2024, 2:49 pm


2018-03-04 17:53:43 BdST

Making new income tax law loses gear in election year


Enforcing a new income-tax law from the upcoming fiscal year to fill a void looks uncertain in the election year, sources said.

The revenue board has adopted a go-slow strategy over completing the draft of the new law, taking a tipoff from government side, sources said.

Sources concerned think the government is unlikely to enforce the crucial law in the election year lest there should be any backlash over new provisions.

The National Board of Revenue (NBR) had a plan to put the draft of new income-tax law in public domain by December 2017 in the process of making the law that became imperative following a court verdict.

The drafting of the income-tax law 2017 in Bangla is yet to be completed by the income-tax wing of the NBR for uploading it for stakeholder opinion.

However, officials said they had almost completed the English version draft.

The government, earlier, had unveiled its plan to place the new income-tax law in the upcoming budget session and implement it from FY 2018-19 to replace the existing Income Tax Ordinance 1984.

Officials said the drafting of the law would need some time as international experts need to be hired to incorporate international best practices into the law.

A team of the income-tax wing recently went to the Netherlands on a study tour to learn about the best practices in income-tax affairs.

The drafting committee is considering incorporation of general anti-avoidance rule (GAAR), special anti-avoidance rules, and thin capitalization into the new income-tax law, a senior official said.

"Such provisions have to be incorporated in the draft law with thorough scrutiny which would need time," he said.

The government of the Netherlands has pledged support to the income-tax authorities through its International Bureau of Fiscal Taxation (IBFT), he added.

Humayun Kabir FCA, taxation subcommittee convener of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and former president of the Institute of Chartered Accountants of Bangladesh (ICAB), said the NBR may consider making cautious move on the income-tax law following the experience with the new VAT law.

The all-encompassing law on value-added tax with a uniform rate got caught in a quagmire of controversies and opposition from businesses.

The government, in the current fiscal budget, deferred implementation of the new VAT and Supplementary Duty (SD) Act 2012 following stiff opposition from the business community. The new VAT law was scheduled to come into force from July 2017.

"New income tax law may also create controversies in the election year. It would not be right time to enforce the new income tax law from next financial year," he added.

Transition in leadership of the National Board of Revenue, change of Chairman and tax-policy member, may be another reason for delay in completing draft of the law, he said.

The initiative to make the new income-tax law has been taken following a verdict of the Supreme Court nullifying the fifth and seventh amendments to the constitution.

Following the apex-court verdict, the Income Tax Ordinance1984, along with other 166 laws, lost validity.

As per the verdict, the NBR in August 2017 placed a draft of the Income Tax Act 2017, transforming the existing ordinance into a law, before the cabinet for its approval.

However, the cabinet sent back the law and asked the NBR to come up with a fresh law on income tax incorporating international best practices.

Tax officials have brought several changes in the existing income-tax ordinance in phases through finance act of every fiscal year. There would not be massive changes in the provisions of the existing law in the new law.

It would be in a simplified language, easy understandable for people, as there have been a great deal of complaints about cumbersome toils of the law that compel taxpayers to hire the services of tax lawyers.

Officials said the government high-ups also remained silent on expediting the drafting of the income-tax law, but the wing continued its work.

Unauthorized use or reproduction of The Finance Today content for commercial purposes is strictly prohibited.

Popular Article from Economy