The government may lose a significant amount of revenues for awarding unconditional tax exemption limit to fish farmers as dishonest taxpayers may take the advantage of evading tax.
The tax benefit finalised in the budget for the current fiscal year will help black money holders to show a significant amount of income from fish farming, even sometimes without having any such earning from the sector, tax officials and anti-graft campaigners said.
The government has set tax-free income limit for fish farmers to Tk10 lakh while the taxpayers have to pay 5% tax on income ranging from Tk10 lakh to Tk20 lakh and 10% above Tk20 lakh.
Just before the new provision, individual taxpayers were liable to pay 10% to 30% tax on their earning from fish farming while the corporate firms 35% tax. The tax authorities earlier in September 2014 withdrew the reduced tax benefits after they found widespread irregularities in availing the benefit.
NBR former member (income tax) Syed Aminul Karim told the Dhaka Tribune earlier they have found many taxpayers showing investments in fisheries just to whiten their undisclosed money while many of them even do not have any such business.
“Many dishonest people may abuse the tax exemption limit by incorporating their other incomes in the fish farming. A large number of taxpayers may show their higher income by paying only 10% tax as fish farmers,” he said.
There will surely be some real farmers who will be benefited with the new provision, but the abuses will be higher, he added.
Many fish farms disappeared after enjoying the reduced tax rates while many taxpayers were found showing false income from fisheries while the money was actually earned from other ventures, NBR officials said.
As the NBR inspectors cannot inspect the rural areas due to lack of manpower, a section of people have been investing small amount of money in fisheries to show their huge income as a means of evading tax or whitening their undisclosed or black money, they added.
The tax authority found the fisheries income as a major tool for tax evasion as it is apparently impossible for inspectors to visit the rural areas, and if they reach somehow, they cannot count how many fish farms are actually owned by an individual fish farmer.
Not only undisclosed money holders, but also many politicians are found to be involved in such abuse.
The issue of higher income by politicians from fish farming came to spotlight just before the 10th parliamentary election when many aspirants showed fish farming as their profession in their affidavits placed before the Election Commission for vying for the January 5 poll.
At least 28 lawmakers showed their earning from fisheries while 17 of them did not have any income from the sector just five years back in 2008, according to their affidavits.
Awami League leaders Sheikh Fazle Noor Taposh, Nur-e-Alam Chowdhury, Elias Uddin Mollah, Mannan Khan, Mahbubul Alam Hanif, ABM Fazle Karim Chowdhury, Didarul Alam and Talukder Abdul Khaleque are at the top of fish farmers’ list which showed that they made a huge amount of wealth from fish farming, according to their poll affidavits.
Transparency International Bangladesh Executive Director Iftekharuzzaman said the abuse of the provision can be a major tool for tax evasion and for whitening undisclosed money.
“Question may be legitimately raised whether in the name of promoting the fisheries sector, the government is in effect granting privilege to some vested quarters at the expense of public interest. This is particularly because this special privilege has already been widely known to be the means of widespread tax evasion and amassing illegitimate income,” he added.