Eight insurance companies have allegedly avoided around Tk345 crore in Value Added Tax (VAT) in four years, according to officials at the Large Taxpayers Unit (LTU) for VAT under the National Board of Revenue (NBR).
The insurers evaded the tax between 2013 and 2016 in these five ways - presenting low insurance tariff, reporting false tariff codes, issuing partial coverage against single bonds, and dodging VAT on agent commission and reinsurance commission.
According to the LTU-VAT, the state-owned Sadharan Bima Corporation allegedly evaded Tk160.95 crore in VAT, Reliance Insurance Ltd evaded Tk26.58 crore, Rupali Insurance evaded Tk9.87 crore, Pragati Insurance Limited evaded Tk9.77 crore, Pioneer Insurance Company avoided Tk52.95 crore, Green Delta Insurance evaded Tk66.08 crore, Phoenix Insurance evaded Tk9.15 crore, and Eastland Insurance evaded Tk9.76 crore.
The LTU-VAT has been trying to realize the evaded tax and has already issued several notices to the insurers, said Commissioner Md Matiur Rahman.
“We are trying to realize the dues both in formal and informal ways. Some insurers went to the court and took out a stay order against our demand notices. We have appealed against them and vacated some of the stay orders,” he said.
“However, we are giving effort to realize the dues both in formal and informal ways.”
The LTU-VAT has already formed a core committee comprising of representatives from the Insurance Development and Regulatory Authority (IDRA), Bangladesh Bank, Bangladesh Insurance Association (BIA) and NBR, the commissioner said.
The committee has already organized a meeting and another will be held soon, added the unit Commissioner.
Bangladesh Insurance Association (BIA) President Sheikh Kabir Hossain told the Dhaka Tribune: “It is a disputed issue. Some companies have also filed writ petitions with the apex court against the VAT as they thought that the NBR claim was incorrect.”
“The companies think that they have not evaded any tax and went for legal help. But they will pay the claimed dues if they lose the legal battle.”
He also said: “For the sake of the insurance industry, we have urged the government not to impose VAT on agents’ commission and reinsurance commission. We hope that the government will take a positive step in this regard.”
When asked past incidents of tax evasion by insurance companies, he admitted that it can happen and at the same time it is not right to blame the whole industry.
“For overall control and monitoring, there are regulatory authorities, laws and other systems,” he added.