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Tax avoidance

Tax avoidance is the legal utilization of the tax regime to one's own
advantage, to reduce the amount of tax that is payable by means that are
within the law. By contrast, tax evasion is the general term for efforts to not
pay taxes by illegal means. The term tax mitigation is a synonym for tax
avoidance. Its original use was by tax advisors as an alternative to the
pejorative term tax avoidance. atterly the term has also been used in the tax
regulations of some jurisdictions to distinguish tax avoidance foreseen by
the legislators from tax avoidance which exploits loopholes in the law.
!ome of those attempting not to pay tax believe that they have discovered
interpretations of the law that show that they are not subject to being taxed"
these individuals and groups are sometimes called tax protesters. #n
unsuccessful tax protestor has been attempting openly to evade tax, while a
successful one avoids tax. Tax resistance is the declared refusal to pay a tax
for conscientious reasons $because the resister does not want to support the
government or some of its activities%. Tax resisters typically do not ta&e the
position that the tax laws are themselves illegal or do not apply to them $as
tax protesters do% and they are more concerned with not paying for particular
government policies that they oppose.
Tax avoidance is the legal utilization of the tax regime to one's own
advantage, to reduce the amount of tax that is payable by means that are
within the law. The 'nited !tates !upreme (ourt has stated that )The legal
right of an individual to decrease the amount of what would otherwise be his
taxes or altogether avoid them, by means which the law permits, cannot be
doubted.) !ee *regory v. +elvering. ,xamples of tax avoidance include"
U.S. tax system;
[1]
however, U.S. citizens who reside (or spend long periods
o time! o"tside the U.S. may #e a#le to excl"de some salaried
income earned overseas (#"t not other types o income "nless
speciied in a #ilateral tax treaty! rom income in comp"ting the U.S.
ederal income tax. The $%%& limit on the amo"nt that can #e
excl"ded was [edit] 'o"ntry o residence
-ne way a person or company may lower taxes is by changing one's tax
residence to a tax haven, such as .onaco, or by becoming a perpetual
traveler. !ome countries, such as the '.!., tax their citizens, permanent
residents, and companies on all their worldwide income. In these cases,
taxation cannot be avoided by simply transferring assets or moving abroad.
The 'nited !tates is unli&e many other countries in that its citizens and
permanent residents are subject to '.!. federal income tax on their
worldwide income even if they reside temporarily or permanently outside
the 'nited !tates. '.!. citizens therefore cannot avoid '.!. taxes simply by
emigrating. #ccording to Forbes magazine some nationals choose to give up
their 'nited !tates citizenship rather than be subject to the '!/01,222.
[edit] (o"#le taxation
.ost countries impose taxes on income earned or gains realized within that
country regardless of the country of residence of the person or firm. .ost
countries have entered into bilateral double taxation treaties with many other
countries to avoid taxing nonresidents twice3once where the income is
earned and again in the country of residence $and perhaps, for '! citizens,
taxed yet again in the country of citizenship% 44 however, there are relatively
few double4taxation treaties with countries regarded as tax havens.
567
To
avoid tax, it is usually not enough to simply move one's assets to a tax
haven. -ne must also personally move to a tax haven $and, for '.!.
nationals, renounce one's citizenship% to avoid tax.
[edit] )egal entities
8ithout changing country of residence $or, if a '.!. citizen, giving up one's
citizenship%, personal taxation may be legally avoided by creation of a
separate legal entity to which one's property is donated. The separate legal
entity is often a company, trust, or foundation. #ssets are transferred to the
new company or trust so that gains may be realized, or income earned,
within this legal entity rather than earned by the original owner. 8hen
transferred bac& to an individual, then capital gains taxes would apply on all
profits.
The company9trust9foundation may also be able to avoid corporate taxation
if incorporated in an offshore jurisdiction $see offshore company, offshore
trust or private foundation%. #lthough income tax would still be due on any
salary or dividend drawn from the legal entity. :or a settlor $creator of a
trust% to avoid tax there may be restrictions on the type, purpose and
beneficiaries of the trust. :or example, the settlor of the trust may not be
allowed to be a trustee or even a beneficiary and may thus lose control of the
assets transferred and9or may be unable to benefit from them.
[edit] )egal *ag"eness
Tax results depend on definitions of legal terms which are usually vague. :or
example, vagueness of the distinction between )business expenses) and
)personal expenses) is of much concern for taxpayers and tax authorities.
.ore generally, any term of tax law, has a vague penumbra, and is a
potential source of tax avoidance
5;7
.
+"#lic opinion on tax avoidance
Tax avoidance may be considered to be the dodging of one's duties to society, or
alternatively the right of every citizen to structure one's affairs in a manner allowed by
law, to pay no more tax than what is re<uired. #ttitudes vary from approval through
neutrality to outright hostility. #ttitudes may vary depending on the steps ta&en in the
avoidance scheme, or the perceived unfairness of the tax being avoided.
In the judiciary, different judges have ta&en different attitudes. #s a generalization, for
example, judges in the 'nited =ingdom before the >?12s regarded tax avoidance with
neutrality@ but nowadays they regard it with increasing hostility. !ee the <uotes below for
examples.
[edit] ,esponses to tax avoidance
#voidance also reduces government revenue and brings the tax system into disrepute, so
governments need to prevent tax avoidance or &eep it within limits. The obvious way to
do this is to frame tax rules so that there is no scope for avoidance. In practice this has not
proved achievable and has led to an ongoing battle between governments amending
legislation and tax advisors' finding new scope for tax avoidance in the amended rules.
To allow prompter response to tax avoidance schemes, the '! Tax Aisclosure
Begulations $622;% re<uire prompter and fuller disclosure than previously re<uired, a
tactic which was applied in the '= in 622C.
!ome countries such as (anada, #ustralia and Dew Eealand have introduced a statutory
*eneral #nti4#voidance Bule $*##B%. (anada also uses :oreign #ccrual Froperty
Income rules to obviate certain types of tax avoidance. In the 'nited =ingdom, there is
no *##B, but many provisions of the tax legislation $&nown as )anti4avoidance)
provisions% apply to prevent tax avoidance where the main object $or purpose%, or one of
the main objects $or purposes%, of a transaction is to enable tax advantages to be obtained.
In the 'nited !tates, the Internal Bevenue !ervice distinguishes some schemes as
)abusive) and therefore illegal.
In the '=, judicial doctrines to prevent tax avoidance began in IB( v Bamsay $>?0>%
followed by :urniss v. Aawson $>?0C%. This approach has been rejected in most
commonwealth jurisdictions even in those where '= cases are generally regarded as
persuasive. #fter two decades, there have been numerous decisions, with inconsistent
approaches, and both the Bevenue authorities and professional advisors remain <uite
unable to predict outcomes. :or this reason this approach can be seen as a failure or at
best only partly successful.
In the '= in 622C, the abour government announced that it would use retrospective
legislation to counteract some tax avoidance schemes, and it has subse<uently done so on
a few occasions. Initiatives announced in 62>2 suggest an increasing willingness on the
part of +.B( to use retrospective action to counter avoidance schemes, even when no
warning has been given.
56?7
In 6220, the charity (hristian #id published a report, Death and taxes: the true toll of tax
dodging, which criticised tax exiles and tax avoidance by some of the world's largest
companies, lin&ing it to the deaths of millions of children in developing countries.
5;27
[edit] Tax protesters and tax resistance
.ain articles" Tax protester, Tax protester arguments, and Tax resistance
!ome tax evaders believe that they have uncovered new interpretations of the law that
show that they are not subject to being taxed $not liable%" these individuals and groups are
sometimes called tax protesters. .any protesters continue posing the same arguments
that the :ederal courts have rejected time and time again, ruling the arguments to be
legally frivolous.
Tax resistance is the refusal to pay a tax for conscientious reasons $because the resister
does not want to support the government or some of its activities%. They typically do not
ta&e the position that the tax laws are themselves illegal or do not apply to them $as tax
protesters do% and they are more concerned with not paying for what they oppose than
they are motivated by the desire to &eep more of their money $as tax evaders typically
are%.
In the '= case of Cheney v. Conn,
5;>7
an individual objected to paying tax that, in part,
would be used to procure nuclear arms in unlawful contravention, he contended, of the
*eneva (onvention. +is claim was dismissed, the judge ruling that )8hat the 5taxation7
statute itself enacts cannot be unlawful, because what the statute says and provides is
itself the law, and the highest form of law that is &nown to this country.)
Income Tax
Income Tax

Important Links
Among direct taxes, income tax is one of the main sources of revenue. In
Bangladesh Income tax is imposed on the basis of ability to pay. The more a
taxpayer earns the more he should pay - is the basic principle of charging income
tax. It aims at ensuring euity and social !ustice.

All individuals and companies in the country need to pay income tax if their annual
income excess certain limit determined by the "overnment. There are some
conditions for paying Income Tax #hich are controlled by Tax La#s and Amendments
in Bangladesh.

Income Tax $eturn is a structured form #here the Tax %ayer mentions his&her
income and expenditure, resources and credit information to submit them to the
Income Tax 'ffice. The form is different for the individual and companies. Tax payers
need the Tax Identification (umber as #ell as some endorsed documents )the
description of salary, security money, housing property, business, partnership basis
income, profit on capital, income tax pay order etc.* to submit the Tax $eturn +orm.
The $eturn +orm is available in the #ebsite of (ational Board of $evenue )###.nbr-
bd.org * #hich is do#nloadable #ith free of cost. All individual or company can have
their Taxpayers Identification (umber from respective income tax office.

,ach class of tax payer has to submit their return form to the selected income tax
circle. (ational Board of $evenue of Bangladesh administers the tax system under
Internal $esource -ivision )I$-* . The #ebsite of (B$ provides information about
paying income tax including the tax rate.

.ho should submit Income Tax $eturn/
0 If total income of any individual other than female taxpayers, senior taxpayers
of 12 years and above and retarded taxpayers during the income year exceeds Tk
3,45,222&-.
0 If total income of any female taxpayer, senior taxpayer of 12 years and above
and retarded taxpayer during the income year exceeds Tk 3,62,222&-.
0 If any person #as assessed for tax during any of the 7 years immediately
preceding the income year.
0 A person #ho lives in any city corporation&paurashava&divisional 89&district 89
and o#ns a building of more than one storey and having plinth area exceeding 3,422
s. feet&o#ns motor car&o#ns membership of a club registered under :AT La#.
0 If any person subscribes a telephone.
0 If any person runs a business or profession having trade license.
0 Any professional registered as doctor, la#yer, income tax practitioner, ;hartered
Accountant, ;ost < =anagement Accountant, ,ngineer, Architect and >urveyor etc.
0 =ember of a ;hamber of ;ommerce and Industries or a trade Association.
0 Any person #ho participates in a tender.
0 A person #ho has a Taxpayer?s Identification (umber )TI(*.
0 ;andidate for @nion %arishad, %aurashava, ;ity ;orporation or %arliament.

;onseuences of (on->ubmission of $eturn
0 imposition of penalty amounting to 32A of tax on last assessed income
sub!ect to a minimum of Tk. 3,222&-
0 In case of a continuing default a further penalty of Tk. 52&- for every day of
delay.

00 B>ourceC (ational Board of $evenue )(B$* , BangladeshD

#mong direct taxes, income tax is one of the main sources of revenue. It is a progressive
tax system. Income tax is imposed on the basis of ability to pay. The more a taxpayer
earns the more he should pay''4 is the basic principle of charging income tax. It aims at
ensuring e<uity and social justice.
-ncome Tax ."thorities/
Income Tax #uthorities are "4
Dational Board of Bevenue,
Airector *eneral of Inspection $Tax%,
(ommissioner of Taxes $#ppeals%,
(ommissioner of Taxes $T'%
Airector *eneral $Training%,
Airector *eneral (entral Intelligence (ell $(I(%,
(ommissioner of Taxes,
#dditional (ommissioner of Taxes $#ppeal9Inspecting%,
Goint (ommissioner of Taxes$#ppeal9Inspecting %,
Aeputy (ommissioner of Taxes,
#ssistant (ommissioner of Taxes,
,xtra #ssistant (ommissioner of Taxes,
Inspectors of Taxes.
So"rces o -ncome/
:or the purpose of computation of total income and charging tax thereon, sources of
income can be classified into 1 categories, which are as follows "
!alaries
Interest on securities
Income from house property
Income from agriculture
Income from business or profession
(apital gains
Income from other sources.
Tax ,ate (.ssessment 0ear1 $%%&1%2! /
3ther than 'ompany "
:or individuals other than female taxpayers, senior taxpayers of 12 years and above and
retarded taxpayers, tax payable for the
:irst >,HI,22294 Dil
Dext 6,1I,22294 >2J
Dext ;,6I,22294 >IJ
Dext ;,1I,22294 62J
Best #mount 6IJ
:or female taxpayers, senior taxpayers of age 12 years and above and retarded taxpayers,
tax payable for the
:irst >,02,22294 Dil
Dext 6,1I,22294 >2J
Dext ;,6I,22294 >IJ
Dext ;,1I,22294 62J
Best #mount 6IJ
.inimum tax for any individual assessee is T&. 6,222
Don4resident Individual 6IJ
$other than non4resident Bangladeshi%
4or 'ompanies
Fublicly Traded (ompany 61.IJ
Don4publicly Traded (ompany ;1.IJ
Ban&, Insurance K :inancial (ompany CIJ
.obile Fhone -perator (ompany CIJ
If any publicly traded company declares more than 62J dividend, >2J rebate on total tax
is allowed.
Tax ,e#ate or investment /
,ate o ,e#ate/
#mount of allowable investment is either up to 6IJ of total income or T&.
I,22,22294 whichever is less. Tax rebate amounts to >2J of allowable investment.
Types o investment 5"aliied or the tax re#ate are /1
ife insurance premium
(ontribution to deferred annuity
(ontribution to Frovident :und to which Frovident :und #ct, >?6I applies
!elf contribution and employer's contribution to Becognized Frovident :und
(ontribution to !uper #nnuation :und
Investment in approved debenture or debenture stoc&, !toc&s or !hares
(ontribution to deposit pension scheme
(ontribution to Benevolent :und and *roup Insurance premium
(ontribution to Ea&at :und
Aonation to charitable hospital approved by Dational Board of Bevenue
Aonation to philanthropic or educational institution approved by the *overnment
Aonation to socioeconomic or cultural development institution established in
Bangladesh by #ga =han Aevelopment Detwor&
6ho sho"ld s"#mit -ncome Tax ,et"rn 7
If total income of any individual other than female taxpayers, senior taxpayers of
12 years and above and retarded taxpayers during the income year exceeds T&
>,HI,22294.
If total income of any female taxpayer, senior taxpayer of 12 years and above and
retarded taxpayer during the income year exceeds T& >,02,22294.
If any person was assessed for tax during any of the ; years immediately
preceding the income year.
# person who lives in any city corporation9paurashava9divisional +L9district +L
and owns a building of more than one storey and having plinth area exceeding
>,H22 s<. feet9owns motor car9owns membership of a club registered under M#T
aw.
If any person subscribes a telephone.
If any person runs a business or profession having trade license.
#ny professional registered as doctor, lawyer, income tax practitioner, (hartered
#ccountant, (ost K .anagement #ccountant, ,ngineer, #rchitect and !urveyor
etc.
.ember of a (hamber of (ommerce and Industries or a trade #ssociation.
#ny person who participates in a tender.
# person who has a Taxpayer's Identification Dumber $TID%.
(andidate for 'nion Farishad, Faurashava, (ity (orporation or Farliament.
Time to S"#mit -ncome Tax ,et"rn/
4or 'ompany
By fifteenth day of Guly next following the income year or, where the fifteenth day of
Guly falls before the expiry of six months from the end of the income year, before the
expiry of such six months.
4or 3ther than 'ompany
'nless the date is extended, by the Thirtieth day of !eptember next following the income
year.
'onse5"ences o 8on1S"#mission o ,et"rn
imposition of penalty amounting to >2J of tax on last assessed income subject
to a minimum of T&. >,22294
In case of a continuing default a further penalty of T&. I294 for every day of delay.

.ssessment +roced"res /
:or a return submitted under normal scheme, assessment is made after hearing.
:or returns submitted under 'niversal !elf #ssessment !cheme, the
ac&nowledgement slip is determined to be an assessment order. 'niversal !elf
#ssessment is of course subject to audit.
.ppeal against the order o ('T /
# taxpayer can file an appeal against A(T's order to the (ommissioner
$#ppeals%9#dditional or Goint (ommissioner of Taxes $#ppeals% and to the Taxes
#ppellate Tribunal against an #ppeal order.
Tax withholding "nctions /
In Bangladesh withholding taxes are usually termed as Tax deduction and collected at
source. 'nder this system both private and public limited companies or any other
organization specified by law are legally authorized and bound to withhold taxes at some
point of ma&ing payment and deposit the same to the *overnment ,xche<uer. The
taxpayer receives a certificate from the withholding authority and gets credits of tax
against assessed tax on the basis of such certificate.
+eads of Income !ubject to deduction or collection of income tax
at source with specified rates of deduction.

8o. 9eads Section:,"le ,ate 'halan in
the name o
> !alaries
!ection I2 deduction at average rate
Bespective
Eone
6 Aiscount on the real value
of Bangladesh Ban& Bills !ection I2#
deduction at normal rate or
maximum rate whichever is
greater.
T'
; Interest on securities !ection I> >2Jon interest or discount T'
C !upply of goods and
execution of contracts and
sub4contracts
!ection
I6$Bule >H%
nil up to > lac, >4I lacs $>J%, I4
>I lacs $6.IJ%, >I46I lacs
;.IJ and 6I lacs and above
$CJ%
Eone46
$Fartly% K
T'
I Indenting commission 9
!hipping agency
commission
!ection I6
$Bule >1%
;.IJ of the total receipt of
indenting commission K IJ of
total !hipping agency
commission receipt
Eone46
H Boyalty, :ees for
professional or technical
services
!ection I6 #>2J of the fees
Eone40
1 !tevedoring agency K
!ecurity service
!ection I6
##
1.IJ of the fees
(tg. Eone46
0 ( K : agency
commission
!ection I6
###
1.IJ of the fees
Eone46
? !ale of bandrolls $ for
biri%
!ection I6B HJ of the value of bandrolls.
Bespective
Eone
>2 (ompensation for
ac<uisition of property
!ection I6( HJ of the compensation money
Eone46
>> Interest on saving
instruments
!ection I6A
>2J of the amount of interest
$(urrent rate%
Eone46
>6 (ollection of tax from
bric& manufacturers
!ection I6: > !ec. N T&.>2,2229 for each
bric& field.
>.I !ec. N T&.>6,2229 for each
bric& field.
Bespective
Eone
6 !ec. N T&.>0,2229 for each
bric& field.
>; (ommission on etter of
(redits
!ection I6I
IJ of the amount of
commission.
T'
>C Issuing K Benewal of
trade licence
!ection I6=
T& I2294 :or renewal of each
incence
Eone4;
>I Trustee fees !ection I6 >2J
>H :rieght :orward agency
(om.
!ection I6. 1.IJ

>1 Bental power !ection I6D CJ
>0 Import of goods !ection I;
$Bule>1#%
;J of the value of imports.
Eone46
>? Income from house
property $house rent%
!ection I;#
$Bule>1B%
Do deduction if monthly rent is
below 62,22294
;J $if monthly rent is 62,2224
C2,222 T&.% and
IJ $if monthly rent is above
C2,222 T&.%
Eone46 Aha
K -ther
outside
Eone
62 !hipping business of
resident
!ection
I;##
IJ of freight
Eone46,ctg
6> ,xport of manpower !ection I;B
$Bule >1(%
>2J of the service charges.
Eone46,
dh& K ctg
66 ,xport of =nitwear !ection
I;BB
2.6IJ
Eone4I
6; .ember of !toc&
,xchange
!ection
I;BBB
2.2>IJ
Eone41
6C ,xport of goods except
=nitweare K 8oven
garments
!ection
I;BBBB
2.6IJ
Eone4I
6I !ale of goods by public
auction
!ection I;(
$Bule >1A%
IJ of the sale price
Eone46
6H (ourier !ervice $Don4
resident%
!ection
I;((
1.IJ
Eone4H
61 Fayment to film actors
and actresses
!ection I;A
$Bule >1,%
IJ of the amount paid
exceeding
T&. ;H22294
Eone46
60 (ash subsidy !ection
I;AA
IJ
Eone4I
6? (ommission :ees or
discount paid to
distributors
!ection I;,
$Bule >1*%
1.IJ of the amount of
commission.
Eone46 K
T'
;2 (ommission or charges
paid to the agents of
foreign buyers !ection I;,,
C J on the amount of
commission or charges.
Ah&.Eone4H,
(tg.Eone4;
and Eone of
Bespective
Aivision
;>
Interest on ban& deposits
!ection I;:
$Bule >1+%
>2J of the amount of interest.
Eone4>
;6 Beal ,state K Aevelopers
!ection I;::
In case of Bldg. 6I2 per s<.
meter
In case of land IJ of deed
value
Eone4I
;; Insurance commission
!ection I;*
;J on the amount of
commission
T'
;C (ommission paid to the
!urveyors of *eneral
Insurances
!ection
I;**
1.IJ on the amount of
commission.
Ah&.Eone46,
(tg.Eone4;
and Eone of
Bespective
Aivision
;I Transfer of property !ection I;+
$Bule >1I%
IJ of the value of the property.
!urvey
Eone
Interest on Fost -ffice
!avings Ban& #ccount
!ection I;I
Do deduction if the amount of
interest does not exceeds
T&.>,I2,222 and if exceeds
then >2J on the amount of
interest .
Eone46
;H Bent of vacant land, plant
and machinery
!ection I;G
$Bule >1BB%
Do deduction if monthly rent is
below >I,22294
;J $if monthly rent is >I,222
4;2,222 T&.% and
IJ $if monthly rent is above
;2,222 T&.%
Eone46

;1 #dvertising bill of news
paper, magazine, private
television channel
!ection I;= ;J of the value of the property.
Eone4I
;0 Aividend
!ection IC
$>% Besident individual >2J,
non4resident individual 6IJ
$6% (ompany >IJ
T' $only
T'Os files%
all others
Eone46
;? Income from lottery !ection II 62J of the amount won. Eone46
C2 Income of non4resident
-ther than non4resident
BangladeshiP
!ection IH
(ompny 4 rate applicable to the
com. -ther than company 4
maximum rate.
Eone4H

;a<or areas or inal settlement o tax lia#ility /
Tax deducted at source for the following cases is treated as final discharge of tax
liabilities. Do additional tax is charged or refund is allowed in the following cases"4
!upply or contract wor&
Band rolls of hand made cigarettes
Import of goods
Transfer of properties
,xport of manpower
Beal ,state Business
,xport value of garments
ocal shipping business
Boyalty, technical &now4how fee
Insurance agent commission.
#uction purchase
Fayment on account of survey by surveyor of a general insurance company
(learing K forwarding agency commission.
Transaction by a member of a !toc& ,xchange.
(ourier business
,xport cash subsidy
Tax ,ecovery System /
In case of non4payment of income tax demand the following measures can be ta&en
against a taxpayer for realization of tax"4
Imposition of penalty
#ttachment of ban& accounts, salary or any other payment.
:iling of (ertificate case to the !pecial .agistrate.
.dvance +ayment o Tax /
,very taxpayer is re<uired to pay advance tax in four e<ual installments falling on >Ith
!eptember@ >Ith Aecember@ >Ith .arch and >Ith Gune of each year if the latest assessed
income exceeds Ta&a three la&h. Fenalty is imposed for default in payment of any
installment of advance tax.
4iscal incentives /
4ollowing are iscal incentives availa#le to a taxpayer/1
a% Tax holiday / Tax holiday is allowed for industrial underta&ing, tourist industry
and physical infrastructure facility established between >st Guly 6220 to ;2th Gune
62>> in fulfillment of certain conditions.
-nd"strial Underta=ing >ligi#le or Tax holiday /
$i% #n industry engaged in production of textile, textile machinery, jute goods,
high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary
ware, steel from iron ore, .! Bod, (I !heet, fertilizer, insecticide K pesticide, computer
hardware, petro4chemicals, agriculture machinery, boilers, compressors, basic raw
materials of drugs, chemicals and pharmaceuticals.
$ii% #n industry engaged in agro4processing, ship building, diamond cutting.
+hysical -nrastr"ct"re >ligi#le or Tax holiday/
!ea or river port, container terminals, internal container depot, container freight
station, D* terminal and transmission line, (D* terminal and transmission line, gas
pipe line, flyover, mono rail, underground rail, telecommunication other than mobile
phone, large water treatment plant K supply through pipe line, waste treatment plant,
solar energy plant, export processing zone.
To"rism -nd"stry >ligi#le or Tax holiday /
Besidential hotel having facility of three star or more.
b% .ccelerated depreciation/ #ccelerated depreciation on cost of machinery is
admissible for new industrial underta&ing in the first year of commercial production
I2J, in the second year ;2J and in the third year 62J.
c% Income derived from any !mall and .edium ,nterprise $!.,% engaged in
production of any goods and having an annual turnover of not more than ta&a twenty four
la&h is exempt from tax.
d% Industry set up in ,FE is exempt from tax for a period of >2 years from the date of
commencement of commercial production.
e% Income from fishery, poultry, cattle breeding, dairy farming, horticulture,
floriculture, mushroom cultivation and sericulture are exempt from tax up to ;2th Gune,
62>>, subject to investing at least >2J of the exempted income that exceeds one la&h
Ta&a, in government bonds.
f% Income derived from export of handicrafts is exempted from tax up to ;2th Gune,
62>>.
g% #n amount e<ual to I2J of the income derived from export business is exempted
from tax.
h% isted companies are entitled to >2J tax rebate if they declare dividend of 62J
or more.
i% Income from Information Technology ,nabled !ervices $IT,!% business is
exempted up to ;2th Gune, 62>>.
.voidance o (o"#le Taxation .greement/
There are agreements on avoidance of double taxation between Bangladesh and 60
countries which are"4
$>% 'nited =ingdom of *reat Britain and Dorthern Ireland, $6% !ingapore $;% !weden
$C% Bepublic of =orea I% (anada $H% Fa&istan $1% Bomania $0% !ri an&a $?% :rance
$>2% .alaysia $>>% Gapan $>6% India $>;% *ermany $>C% The Detherlands $>I% Italy $>H%
Aenmar& $>1% (hina $>0% Belgium $>?% Thailand $62% Foland $6>% Fhilippines $66%
Mietnam $6;% Tur&ey $6C% Dorway $6I% '!# $6I% Indonesia $61% !witzerland $60% -man
What is Tax Avoidance?
Tax avoidance is a strategy which involves exploiting legal means of
reducing taxes with the goal of minimizing tax liability. #voidance is a
perfectly legal approach to handling taxes, although
sometimes avoidance practices can stray into the realm of being abusive, at
which point people may cross the line into tax evasion. In tax evasion,
people utilize illegal means to avoid paying all or part of their taxes@ evasion
can result in prosecution and fines or prison time.
.ost taxpayers engage in a certain amount of tax avoidance, because people
want to avoid paying more taxes than they need to. In a simple example,
most people claim all of the exemptions available to them. i&ewise, people
may ta&e advantage of retirement accounts which offer tax savings if they
plan on saving money for retirement@ as long as one is putting money aside,
one might as well reduce taxes at the same time.
These tax avoidance strategies are usually encouraged by financial
planners and accountants.
Frint :riendly Mersion
Fublished -n" 622?4>>4>?
Business
!eminar stresses better tax collection procedures
!tar Business Beport
The government should better the tax administration to increase revenue collection, said
former chairman of the !ecurities and ,xchange (ommission yesterday.
)The government should pay more attention to improving the performance of the
Dational Board of Bevenue $DBB%, which at present is receiving the least attention. This
entity needs more budgetary allocation and investment to enhance performance,) said
:aru& #hmed !iddi<i.
)The tax administration should be computerised and a complete database should be
there to help taxpayers get information regarding income and corporate taxes,) he said.
)# computerised database will also help ensure transparency and reduce corruption.)
!iddi<i was spea&ing at a discussion on ',xcessive Begulations on Aoing Business in
Bangladesh" # !tudy on Tax #dministration', organised by International Business :orum
of Bangladesh $IB:B% at its office in Aha&a.
+e said the number of staff should be raised to overcome the present difficulties that
taxpayers face in assessing their taxes.
!iddi<i stressed reforming the country's present tax law and ma&ing it more realistic and
simple, which will encourage individual taxpayers to submit their taxes spontaneously.
+e also urged corporate taxpayers to change their mindset and not to dodge taxes to help
accelerate economic growth.
In his &eynote paper, !wapan =umar Bala, assistant professor of the #ccounting
Aepartment at Aha&a 'niversity, said the present income tax law is difficult, often gives
rise to confusion and has many loopholes to escape paying taxes.
)The tax law should be simplified to attract more taxpayers into the tax net. #t the same
time, the government should simplify the income tax rules and !tatutory Bules and
-rders $!B-% that have come into effect so far.)
)Feople in Bangladesh have a tendency to avoid tax procedures, simply because of the
difficult steps involved,) he added.
Taleya Behman, chairperson of Aemocracywatch, urged the government to ta&e
measures to educate local taxpayers properly, which will help reduce fear in the minds
of citizens.
.ahmudul Islam (howdhury, president of IB:B, said his forum is preparing a proposal
to help simplify the procedures, which they plan to unveil mid4Aecember.
Bo&hsana =hondo&er, executive director of =han :oundation, and . .ofizur Bahman,
executive director of IB:B, were also present.