Author Topic: MNCs’ transaction scrutiny soon to plug revenue leaks  (Read 220 times)

Offline Rozina Akter

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MNCs’ transaction scrutiny soon to plug revenue leaks
« on: July 13, 2016, 02:57:50 PM »
Government's tax authority starts scrutiny of the statements of international transactions (SITs) of the multinational companies (MNCs) this month as a step to plug revenue leaks, officials said.

The cross-check of the multinationals' international transactions will be done to formally enforce the transfer-pricing law meant for preventing deliberate mispricing done by MNCs to enjoy lower tax incidence.

The Transfer Pricing Cell (TPC) of the National Board of Revenue has already collected SITs from the field offices across the country for auditing tax files of the MNCs.

According to the Income Tax Ordinance 1984, section 107 EE, and the Income Tax Rules 1984, rules 75A, taxpayers having international transactions have to submit SIT to their respective tax offices.

The field offices sent the SITs in a prescribed format that includes name of taxpayers, TIN, tax zone and circle, date of income-tax-return submission and date of SIT submission.

The TP rule was issued by the NBR under a provision incorporated into the Finance Act 2012.

Sources concerned said the tax authority has yet to make its transfer-pricing unit vibrant with the logistics and infrastructure although the initiative was taken amid huge enthusiasm to check alleged profit shifting by the multinational companies from Bangladesh.

"The income tax wing could not carry out any audit of the tax file of any of the MNCs in the just-concluded fiscal year," said one source.

There was no separate space with logistic support allocated for the transfer-pricing cell to work on the matter. Recently, the NBR allocated a space for the TPC to intensify its activity.

The Transfer Pricing Cell was scheduled to scrutinise income-tax returns containing cross-border financial transactions for the first time in the 2015-16 tax year.

There are some 175 MNCs operating in Bangladesh which would come under TPC scanner.

As per transfer-pricing rules, accounts and records of the MNCs will be maintained separately as prescribed by the tax authority. Particulars of international transactions, tangible property of revenue and capital nature of transaction should be furnished in a prescribed form.

Allegations have it that high rate of corporate tax in Bangladesh is a major reason for transfer mispricing to siphon of funds to dodge paying the right amount of tax under the law.

Many companies are discouraged from showing high profit as they have to pay corporate tax at higher rates.

MNCs take recourse to strategy to reduce total tax incidence of a company by shifting profits to countries where corporate-tax rates are comparatively lower.

Source: The Financial Express
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Offline Nujhat Anjum

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Re: MNCs’ transaction scrutiny soon to plug revenue leaks
« Reply #1 on: July 20, 2016, 03:32:09 PM »
Thanks for sharing.

Offline Rozina Akter

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Re: MNCs’ transaction scrutiny soon to plug revenue leaks
« Reply #2 on: July 26, 2016, 05:46:56 PM »
 :)
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Offline shafayet

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Re: MNCs’ transaction scrutiny soon to plug revenue leaks
« Reply #3 on: March 13, 2017, 06:55:20 PM »
Thanks for the post :)