A LEADING daily recently reported that around 51 percent of registered non-government organizations based in Dhaka do not file income tax returns to escape paying taxes. Only 499 or 50.78 percent Dhaka-based registered NGOs have filed the tax returns and the remaining 473 NGOs were out of tax-net last year. NGOs income from operation of microcredit activities is exempted from tax but the tax is applicable on other income sources like commercial activities, renting out space etc. They must pay tax.
According to NGO Bureau, a total of 2,580 NGOs are operating in the country and it is mandatory to be registered with NGO Affairs Bureau to obtain electronic tax-payers’ identification numbers and to submit income tax returns. NGOs are also responsible, as tax deduction authorities, for deducting or collecting income tax at source before making fees and charges to professionals like doctors, royalty or technical know-how fees to professionals or technical service providers, charges to catering service providers, cleaning service, event management, printing service, transport provider and meeting fees, training fees or honorarium.
Deduction authorities have to deposit the tax at source to State Exchequer and Income Tax Zone-5, Dhaka, which is dedicated to supervise income tax issues of Dhaka based NGOs. Officials of the Revenue Board said tax office recently compiled NGOs data and found their tax compliance level is very disappointing. Many registered NGOs remained out of tax-net depriving the government of due tax. The amount of tax collected from the sector is very low compared with their commercial activities. The NBR received Tk 284.63 crore in the last fiscal year against Tk 132.65 crore in FY2015-2016. But the collection in the first five months of the current FY2017-2018 is only Tk 34.49 crore which is very disappointing.
The sector offers huge potential of boosting government tax collection as many NGOs have various types of commercial activities like operating banks, constructing skyscrapers, running schools, colleges and universities, holding conferences, and running training centers. Revenue collection would increase significantly if the NBR can bring all NGOs under the tax-net.
We suggest both the parties – NBR and NGOs — should establish closer cooperation when it comes about tax collection to develop a win-win situation for them. NGOs are working for the socio-economic development but they are equally obliged to pay tax to support the state. There is no reason they remain out of the tax-net.
According to NGO Bureau, a total of 2,580 NGOs are operating in the country and it is mandatory to be registered with NGO Affairs Bureau to obtain electronic tax-payers’ identification numbers and to submit income tax returns. NGOs are also responsible, as tax deduction authorities, for deducting or collecting income tax at source before making fees and charges to professionals like doctors, royalty or technical know-how fees to professionals or technical service providers, charges to catering service providers, cleaning service, event management, printing service, transport provider and meeting fees, training fees or honorarium.
Deduction authorities have to deposit the tax at source to State Exchequer and Income Tax Zone-5, Dhaka, which is dedicated to supervise income tax issues of Dhaka based NGOs. Officials of the Revenue Board said tax office recently compiled NGOs data and found their tax compliance level is very disappointing. Many registered NGOs remained out of tax-net depriving the government of due tax. The amount of tax collected from the sector is very low compared with their commercial activities. The NBR received Tk 284.63 crore in the last fiscal year against Tk 132.65 crore in FY2015-2016. But the collection in the first five months of the current FY2017-2018 is only Tk 34.49 crore which is very disappointing.
The sector offers huge potential of boosting government tax collection as many NGOs have various types of commercial activities like operating banks, constructing skyscrapers, running schools, colleges and universities, holding conferences, and running training centers. Revenue collection would increase significantly if the NBR can bring all NGOs under the tax-net.
We suggest both the parties – NBR and NGOs — should establish closer cooperation when it comes about tax collection to develop a win-win situation for them. NGOs are working for the socio-economic development but they are equally obliged to pay tax to support the state. There is no reason they remain out of the tax-net.
