The Asian Development Bank recommended the National Board of Revenue enhance institutional capacity and upgrade technology to make the online income tax returns filing system sustainable as only 0.33 per cent or 7,209 income taxpayers filed tax returns online in the last fiscal year 2019-2020.
Terming the online income tax returns filing system likely sustainable, the ADB said that sustainability of the system would depend on what actions and follow-up measures are taken by the NBR in future to make the system effective.
The Manila-based multilateral lender made the observation in a project completion report on ‘Strengthening Governance Management Project’ released last week.
The SGMP was undertaken in 2010 at a cost of $30.3 million with loan worth $25 million from the ADB to automate the tax and land administrations.
The project was scheduled to be completed in December 2013 but was finished in June 2018 at a reduced cost of $20.5 million, including ADB’s finance worth $17.455 million.
Of the revised project cost, the NBR spent $7.5 million to introduce an online returns submission system under the Bangladesh Integrated Tax Administration System, an integrated software application, and buy the required hardware for its 650 field-level tax offices.
A total of 7,209 income taxpayers, 0.33 per cent of the total 22 lakh returns, filed their tax returns through the online system introduced in November 2016 in the last fiscal year 2019‑2020, the report said.
Only 13,895 taxpayers filed their tax returns online during the previous four tax assessment years in FY2016‑FY2019.
No large taxpayer, who account for 25 per cent of the total income tax filed in the country, submitted returns online during the period.
‘To establish an effective and sustainable online tax returns filing system, the NBR must enhance its institutional capacity and conduct awareness programmes for taxpayers,’ it said.
It also said that modules for e-payment, tax deduction at source and a mechanism for tax consultants to file returns online on behalf of taxpayers should be integrated to make online return filing more acceptable and user-friendly.
The NBR must also strengthen its monitoring of online tax returns filing and improve taxpayer information and helpdesk services, it added.
The NBR should pay attention to make the online tax return filing popular among large taxpayers by addressing their concerns.
The ADB could consider providing a follow-on loan to the revenue board to create a modern and efficient tax returns filing system by further upgrading the existing system, the report said.
The bank, however, said in its report that the project had successfully delivered three outputs — introduction of an online income tax returns filing system, setting up of tax service centres across the country and developing a digital land records system on pilot basis.
The project is also rated effective as all the output indications and most of the related outcome indicators were achieved.
The project, however, is less than efficient, although the envisaged outputs were delivered at 33 per cent below the appraisal cost, as the project saw a delay in implementation by four years and six months.
Officials of the NBR said that the revenue board had already formed a seven-member committee to explore ways to revive and make the system effective after it found it to be incomplete, ineffective and unfriendly to users.
The committee, headed by NBR member (tax information management and services) Hafiz Ahmed Murshed, is now working to identify the problems in the system and place recommendations to make the system popular among taxpayers, they said.
The Implementation, Monitoring and Evaluation Division of the planning ministry in a report published last June commented that the project had failed to achieve its goals.
Moreover, Vietnam-based vender FPT Information System Corporation did not hand over the BiTAX system to the revenue board, risking the confidentiality of the taxpayers’ information and the country’s tax system.
The NBR, however, denied the allegation and said that it had full control of the system.
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