DOULOT AKTER MALA |
Jan. 03, 2022, 8:15 a.m.
Jan. 03, 2022, 9:01 a.m.
About two-thirds of corporate tax returns may require a blanket amnesty or be penalized by taxpayers because the pre-audited financial statements for their current tax year are unlikely to match previous ones.
From the current tax year, all corporate taxpayers must submit financial statements certified by the Document Verification System (DVS) audited by Chartered Accountants (CA) with their tax returns.
Until last fiscal year, the National Board of Revenue (NBR) had received approximately 30,000 corporate income tax returns.
Although financial statements audited by a CA are mandatory with every corporation tax return, according to the Bangladesh Institute of Chartered Accountants (ICAB), CAs typically only certify 10,000 to 12,000 financial statements attached to the financial statements. corporate tax returns per year.
These data show that nearly 20,000 or two-thirds of financial statements can be accompanied by corrected financial statements this year using the DVS developed by ICAB.
Tax experts say corporate taxpayers may need a general amnesty from the tax department this year because taxes would only accept financial statements audited by the DVS with returns.
Most corporate taxpayers would submit their tax returns by January 15.
CAs and tax practitioners allege that some of the corporate taxpayers, which previously submitted false audit reports to evade tax, submitted tax returns bypassing the financial statements audited by the DVS “circle office manager” tax or through underhand transactions ”.
They suggest punitive measures and strict oversight to check for unethical practices to ensure a unique audit report for a company for all intents and purposes.
A senior official in the income tax wing of the tax administration, preferring anonymity, said the NBR may consider a case-by-case amnesty on previous audit reports of corporate taxpayers who submit reports verified by the DVS this year.
“We will definitely accept corporate tax returns verified by the DVS,” said a tax official in the field.
He says taxpayers usually refrain from verifying tax returns if income over 15 percent is shown on the return.
“In general, we check less than 2.0 to 3.0% of tax returns,” he adds.
Another tax official said the NBR might not go public even if it offers an amnesty because the case could attract criticism.
Dr Ahsan H Mansur, Executive Director of the Bangladesh Policy Research Institute (PRI), strongly recommends allowing corporate taxpayers to correct their financial statements this year with the help of the DVS, as such an amnesty would be required only once.
“Taxpayers can apply the ‘grandfather clause’ in this case to offer a general amnesty allowing corporate taxpayers to submit tax returns once corrected,” he said.
Former income tax wing member Aminur Rahman believes a complex situation could be created this year unless the BNR offers an amnesty on financial statements from previous tax returns which have been prepared or not certified by the CA.
“From this year, all corporate taxpayers will have to submit an audit report verified by the DVS and the report would not match that of the previous year,” he said of a certain mismatch in such cases.
A tax return contains income, expenses, assets and liabilities and other details that ordinary taxpayers, individuals and businesses, prepare in accordance with the previous year. Any significant change in financial data usually prompts taxpayers to select tax files to audit to verify tax evasion.
The ICAB introduced the DVS on December 1, 2020. Until December 31, 2021, some 323 CAs had registered under DVS while the number of companies registered under the verification system is 150.
ICAB President Md Shahadat Hossain hopes that the authentication of the auditor’s report should be ensured and the submission of false auditor’s report should be stopped through DVS.
“It is the responsibility of the relevant BNR officials to verify whether an audit report contains a DVC (document verification code),” he said.
However, it emphasizes the quality of the audit and the auditor’s report, as a proper audit in accordance with auditing standards is also important.
“The NBR has the right to check the quality of the financial statements submitted to it and if there are any deficiencies, it can take action accordingly,” he observed.
The ICAB performs a quality assurance review of all auditors. All auditors, audit firms and audited financial statements may be reviewed by the quality assurance department or reviewed by the law enforcement department of the ICAB at any time.
“Due to the DVS, there is no way to deny responsibility for conducting an audit and therefore the responsible auditor or audit firm will be subject to a penalty for lack of quality once identified” , said the president of the ICAB.
“We believe that the quality of the audit will ultimately be significantly improved thanks to DVS.”
ICAB board member Snehasish Barua said the NBR could make companies taxpayer by imposing a criminal tax to show their former undisclosed assets that they had hitherto hidden.
“The tax administration may consider accepting without any doubt the current year financial statements, as this is a transitional period for corporate tax compliance in Bangladesh with DVS,” he adds. he.