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Under-invoicing of imports
Tk 20,000 cr revenue goes to black hole
http://thenewnationbd.com/newsdetails.aspx?newsid=47995
. Faruque Ahmed
The government is losing enormous amount of revenue from under-invoicing of imports there by allowing importers topay less import duty, VAT, supplementary taxes and such other fees payable onimported goods.
Business sources said the loss of government revenue may have been at around US$ 2.7 billion last year from a gross omission of import value of around $ 6 billion worth of commodities in the import list.
The revenue loss in terms oflocal currency may stand over Tk 20,000 crore which is equivalent of the cost of Padma bridge, the sources said. If the government were able to check the fraud and realize the entire revenue, it couldeven avoid borrowing from banks for budgetary support of the annual development programme; which is estimated ataround Tk 23,000 crore under the current fiscal, they say.
Moreover the under-invoiced products entering the country at lower cost compared to their real cost of buying are working to undermine local producers, such as electrical and electronics gods. It is working as two edged sword- depriving the government of its legitimate dues in one hand and destroying local industries on the other.
Talking about how the revenue loss from under-invoicing may be calculated, a leading importer told The New Nation Monday that they have to pay various taxes, commonly known as TTI (total tax incidence) at the import stage.
It varies from 39 percent at thelowest to 85 percent at the highest as per the rates fixed by Bangladesh Tariff Commission. The higher incidence rates are fewer, he said.
It includes not only customsduty, regulatory duty, supplementary duty and VAT but also AIT (advance income tax), ATV (advance tradevat) and PSI charges.
He said taking the average TTI at 45 percent of the import valuation, the government revenue loss may be at $2.70 billion as per tariff Commission estimate. It may be slightly higher or evenlower.
He said, the under-invoicing gap may be calculated from the trade figures of a country that Bangladesh Bank (BB) maintains for import bills settlement in one hand and that of the exporting country's own trade figures on the other.
For example, he said as per BB's trade figure imports from China last year stood at $ 5.9 billion but the Chinese embassy figure showed it at $ 8.0 billion. It means $2.1 billion worth of imports were under-invoiced from Bangladesh side and the government revenue loss stood accordingly, he said.
Similarly, under-invoiced imports from India stood at around $1.5 billion, Last year in addition to $ 4.5 billion reported cost of the imports in the bills of lading. Imports from South Korea had $ 700 million lost in under-invoicing. It was $ 500 million in case of Malaysia.
These are few big sources of imports and taking the total reported imports at $ 33.36 billion last year, the actual import has been roughly reported at $39 billion. It means $ 6 billion worth of imports were lost in under-invoicing, the source said.
He said China is a big source of imports. Business houses in Bangladesh buy toys, shoes, shoe souls, imitation jewelry, electrical goods, hard-wares, decoration items, plastic resins, boll bearing and garments from China. Apart from India, most items are now coming from China, he said pointing to some city markets which are really flooded with Chinese goods.
He said most importers from China, as also from other destinations resort to widespread under-invoicing.They produce an invoice of $ 5,000 to 10,000 for a container of goods while its real cost at times stands at around $100,000.
Customs officials and clearingand forwarding agents share the tax evasion benefits while the importers, in most cases enjoying patronization of vested quarters go away without paying the proper dues depriving the national exchequer.
It is an open secret, the sources said. When there are more restrictions, the black holes rather operate at more ease, they said.
Tk 20,000 cr revenue goes to black hole
http://thenewnationbd.com/newsdetails.aspx?newsid=47995
. Faruque Ahmed
The government is losing enormous amount of revenue from under-invoicing of imports there by allowing importers topay less import duty, VAT, supplementary taxes and such other fees payable onimported goods.
Business sources said the loss of government revenue may have been at around US$ 2.7 billion last year from a gross omission of import value of around $ 6 billion worth of commodities in the import list.
The revenue loss in terms oflocal currency may stand over Tk 20,000 crore which is equivalent of the cost of Padma bridge, the sources said. If the government were able to check the fraud and realize the entire revenue, it couldeven avoid borrowing from banks for budgetary support of the annual development programme; which is estimated ataround Tk 23,000 crore under the current fiscal, they say.
Moreover the under-invoiced products entering the country at lower cost compared to their real cost of buying are working to undermine local producers, such as electrical and electronics gods. It is working as two edged sword- depriving the government of its legitimate dues in one hand and destroying local industries on the other.
Talking about how the revenue loss from under-invoicing may be calculated, a leading importer told The New Nation Monday that they have to pay various taxes, commonly known as TTI (total tax incidence) at the import stage.
It varies from 39 percent at thelowest to 85 percent at the highest as per the rates fixed by Bangladesh Tariff Commission. The higher incidence rates are fewer, he said.
It includes not only customsduty, regulatory duty, supplementary duty and VAT but also AIT (advance income tax), ATV (advance tradevat) and PSI charges.
He said taking the average TTI at 45 percent of the import valuation, the government revenue loss may be at $2.70 billion as per tariff Commission estimate. It may be slightly higher or evenlower.
He said, the under-invoicing gap may be calculated from the trade figures of a country that Bangladesh Bank (BB) maintains for import bills settlement in one hand and that of the exporting country's own trade figures on the other.
For example, he said as per BB's trade figure imports from China last year stood at $ 5.9 billion but the Chinese embassy figure showed it at $ 8.0 billion. It means $2.1 billion worth of imports were under-invoiced from Bangladesh side and the government revenue loss stood accordingly, he said.
Similarly, under-invoiced imports from India stood at around $1.5 billion, Last year in addition to $ 4.5 billion reported cost of the imports in the bills of lading. Imports from South Korea had $ 700 million lost in under-invoicing. It was $ 500 million in case of Malaysia.
These are few big sources of imports and taking the total reported imports at $ 33.36 billion last year, the actual import has been roughly reported at $39 billion. It means $ 6 billion worth of imports were lost in under-invoicing, the source said.
He said China is a big source of imports. Business houses in Bangladesh buy toys, shoes, shoe souls, imitation jewelry, electrical goods, hard-wares, decoration items, plastic resins, boll bearing and garments from China. Apart from India, most items are now coming from China, he said pointing to some city markets which are really flooded with Chinese goods.
He said most importers from China, as also from other destinations resort to widespread under-invoicing.They produce an invoice of $ 5,000 to 10,000 for a container of goods while its real cost at times stands at around $100,000.
Customs officials and clearingand forwarding agents share the tax evasion benefits while the importers, in most cases enjoying patronization of vested quarters go away without paying the proper dues depriving the national exchequer.
It is an open secret, the sources said. When there are more restrictions, the black holes rather operate at more ease, they said.
