AS transfer pricing regulations for the multinational companies finally came into effect, allegations have it that MNCs evade tax and transfer funds from Bangladesh by abusing the transfer pricing system. Reports have it that mispricing is happening in different ways including over-invoicing and under-invoicing during transactions of goods and services within their associated companies and transfer of dividends and profits to its parent companies. Transfer pricing occurs when a company pays or gets paid for purchase or sales or transfers of any tangible or intangible output to another company which is a subsidiary of the former or in which it has a substantial interest in any form.
The MNCs will have to submit the statements of their international transactions in a prescribed form along with the income tax returns from the next fiscal year of 2015-2016, NBR sources said. NBR officials will be prepared within a very short time and will train themselves for conducting audits, they said. The Revenue Board has already formed a transfer pricing cell which will investigate and undertake audit of international transactions made by MNCs within the associated enterprises to check tax evasion and capital flight from the country. According to the rules, the MNCs will have to maintain the information regarding their expenses and earnings from transactions related to financial, tangible property, intangible property and services.
It has been reported several times in the local media that MNCs are involved in accounting manipulations and other forms of maneuvering to bypass the pricing and so on to transfer capital from Bangladesh. By this way a good deal of capital is already being funnelled out of Bangladesh. This is nothing but another form of a colonial transfer mechanism. We urge NBR to capitalize on the full benefits of modern day auditing technology and training procedures so as to tackle this issue with an iron fist. Monitoring should be particularly focused on information related to transactions of stock, raw materials, payment as rent, royalties for the use of patents, trademark, and franchise license fees, treasury related services, management and administrative services, sales and marketing services, software and ICT services, technical and engineering services, commission, logistics and asset management services, payment of interest, sales of financial assets, lease payment, securities lending, insurance and guarantees.
In this regard if any specialized training or human resource is needed, NBR and Bangladesh Bank should fully employ them and proper allocation of the budget on this account should be sanctioned. This spending in training should be seen as an investment that will be recuperated in multiple ways if the siphoning away of the money could be checked in balance. We urge NBR, BB and Ministry of Finance to tackle this with high priority and thereby block the means of colonial transfer mechanisms adopted by MNCs.
