Electronic transfers

Government to toughen rules for companies paying over Tk 50,000

The government could force companies to use formal channels such as banks and mobile financial services for transactions involving more than Tk 50,000 from next fiscal year.

The decision, if implemented, will encourage the transfer of funds through formal channels and give a major boost to MFS and other digital means.

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The plan is expected to be presented by AHM Finance Minister Mustafa Kamal in his budget proposal for the next fiscal year on June 3.

And if he gets the consent of parliament, companies will also have to make all payments, including those for the purchase of raw materials costing more than Tk 50,000, through formal banks, MFS and other approved digital means. by Bangladesh Bank.

In the event of non-compliance, businesses are likely to see tax officials reject the expenses claimed as payment.

“This will formalize a large number of transactions and curb tax evasion. It will be beneficial for the whole economy,” said a senior official at the Ministry of Finance.

The tax authorities plan to include the MFS and other digital means in its rule, as the money changing hands through electronic channels has increased dramatically in recent years.

For example, the MFS segment, which was unknown to most common people even in 2010, has made great strides due to convenience and instant transfer.

Today, Bangladesh has 15 MFS providers, processing around 2,000 Tk crore per day. Two years ago, the average daily transaction through MFS was just over Tk 1,100 crore, according to BB data. MFS providers have 10.27 crore in account holders.

Officials said the Income Tax Law contains provisions requiring companies to pay wages and salaries above Tk 15,000 to employees by crossed check or wire transfer. Otherwise, the expenses claimed by the companies in their tax returns are not accepted by the tax officers, which means that the companies have to pay taxes on the amount.

The use of cross checks and bank transfers is also mandatory for the payment of rent for the use of any real estate in order to avoid tax claims from the authorities.

However, the purchase of raw materials in an amount greater than Tk 50,000 has been excluded so far. According to the latest plan, wire transfers, which include banks, MFS and other digital means, are likely to be mandatory for payment for the purchase of commodities.

Additionally, entrepreneurs may need to receive payments through banks, MFSs, and other electronic systems if they are to avoid a 50% increase in rate taxes payable.

Contractors who do not have the 12-digit TIN (taxpayer identification number) are likely to have to pay 50% higher taxes when they receive payments for work performed.

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