Opinion

Advertisement

 

Govt must reprogramme tax policy to stop corporate abuse

Published: 00:00, Nov 22,2020

 
 

THE findings of the State of Tax Justice 2020: Tax Justice in the Time of COVID-19 that the Tax Justice Network, a London-based global alliance for tax justice, released on Friday saying that Bangladesh loses about $703.39 million in taxes a year because of corporate tax abuse and offshore tax evasion is gravely worrying in that the amount accounts for 61.89 per cent of Bangladesh’s public health expenditure. The amount of taxes lost, which accounts for 3.46 per cent of the collected tax revenue, could also pay 392,398 nurses a year. The amount of annual taxes lost includes $674.24 million caused by corporate tax abuse and $29.15 million caused by offshore tax evasion. Although the report has compared the amount of taxes lost with the percentage of the annual health expenditure and the number of nurses who could be paid a year with the amount because of its basis of tax justice in the time of the COVID-19 pandemic, the amount could well be spent by the government on any other sectors where the money is needed most if the amount of taxes could be saved from being lost. The report shows that the pandemic has exposed the grave cost of turning tax policy into a tool for indulging tax abusers instead of protecting people’s well-being.

The Tax Justice Network — which in the report says that the world loses more than $427 billion in taxes a year, with $245 billion to global corporate tax abuse and $182 billion to global private tax evasion — says that Bangladesh’s most vulnerable trading channel is inward foreign direct investment. A situation like this suggests that governments around the world under pressure from corporate giants and tax haven powers have programmed the global tax system to prioritise the desires of the wealthiest corporations and individuals over the needs of everybody else. This warrants that the Bangladesh government, as governments around the world now feel, should revise the tax system so that corporate tax abuse and offshore tax evasion could be stopped. The National Board of Revenue, in the light of such happenings, is reported to have instituted early November a transfer pricing cell for its customs wing to curb money laundering by multinational companies — there are 921 of them in Bangladesh — through the manipulation of the transfer pricing system in import and export. The move is belated and this is too early to assess the impact of the formation of the transfer pricing cell. Yet the government appears to be in need of a drastic revision of tax regime to stop corporate tax abuse and offshore tax evasion.

Tax regime on the home front has also not been known to be very effective. The government must shore up the issue as the number of tax payers in Bangladesh is still very low. While the government must, in such a situation, step up efforts to attend to the tax regime on the home front, it must also revise and reprogramme its tax policy so that corporate entities cannot abuse tax regulations and others cannot make use of offshore tax evasion at the cost of the need of everybody else.

More about:

Want stories like this in your inbox?

Sign up to exclusive daily email

Advertisement

 

Advertisement

images