National Board of Revenue is set to launch a special survey on multinational companies operating in the country to identify the entities which have international transactions in the form of transfer pricing process and to check tax evasion through misuse of the system.
Transfer pricing cell (TPC) of NBR will conduct the survey phase by phase on 921 MNCs operating in the country in the form of company, branch office, representative office, liaison office, permanent establishments or others.
It will also prepare separate tax profile of the companies based on information to be found through the survey to track their previous years’ international transactions.
The first phase of the survey will start by January to collect functional and financial status of the entities, a TPC member told New Age on Wednesday.
‘So, we call it functional survey and TPC will select the firms on priority basis based on the nature and volume of business for the first part of the survey from the list of 921 MNCs,’ he said.
The cell will send a questionnaire to the particular firm seeking information like type of the firm, type of business, tax payment status, international transactions with its associated enterprises abroad, status of its parent company, job descriptions of top management and some other financial details of the firm, he said.
TPC prepared the list gathering information from various sources including Foreign Investors’ Chamber of Commerce and Industry and NBR field offices back in mid-2017 but could not carry out the survey as NBR high-ups did not give positive nod fearing negative impact on the investors’ mind.
NBR chairman Md Mosharraf Hossain Bhuiyan has recently approved a proposal in this connection.
Officials said that TPC had already prepared a questionnaire that would soon be sent to the selected companies seeking a set of information for last few years.
Statement of international transactions (SITs) of the companies will also be collected to analyse the transactions and prepare the tax profiles of the companies, they said.
They said that the cell was scheduled to start conducting audit on SITs of the firms this month.
According to TP law, foreign firms having international transactions are bound to submit their SITs but on average only 130-140 MNCs submit the statements.
The NBR chairman at the latest board meeting instructed TPC coordinator Shabbir Ahmed, also joint director of Central Intelligence Cell of NBR, to complete the activities related to survey and audit, officials said.
Transfer pricing occurs when an MNC pays or gets paid for purchase or sales or transfer of any tangible or intangible output to any of its associates or subsidiary companies in which the company has substantial interest in any form.
NBR suspects that many MNCs evade tax and transfer fund from the country through TP system misuses including over-invoicing and under-invoicing during transactions of goods and services within their associated companies and transfer of dividend and profit to their parent companies.
The revenue board in June, 2012 introduced transfer pricing law in the country and formed a cell in February, 2014 to audit SITs of MNCs to check tax evasion through misuse of TP system.
NBR is yet to start conducting audit on SITs but some seven MNCs including a foreign mobile telephone operator have voluntarily paid additional Tk 10 crore in taxes in the current fiscal year after carrying out self-assessment of their international transactions.
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