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Moves to streamline foreigners’ jobs in Bangladesh fall flat
All major steps taken by government agencies to check illegal employment of and tax evasion by foreign nationals and to prepare a database of such nationals have remained mostly on paper even after...
www.newagebd.net
Moves to streamline foreigners’ jobs in Bangladesh fall flat
Country loses vast forex in taxes
Jasim Uddin | Published: 23:59, Aug 21,2020 | Updated: 21:46, Aug 22,2020
All major steps taken by government agencies to check illegal employment of and tax evasion by foreign nationals and to prepare a database of such nationals have remained mostly on paper even after more than half a decade.
The government agencies have failed to ensure the payment of salaries and remunerations to foreign workers through the banking channel, leaving the scope wide open for tax evasion even by legal foreign workers.
Though there are no formal or institutional figures of foreigners working in the country but various estimates say that the number is between 5 lakh and 10 lakh.
The National Board of Revenue said that 10,000 foreign workers submitted their tax returns in the immediate past fiscal year but home minister Asaduzzaman Khan told parliament the previous year that 85,486 foreigners from 44 countries were legally working in different sectors of Bangladesh.
Transparency International Bangladesh in a study in February 2020 said that at least 2.5 lakh foreigners from 44 countries were working in Bangladesh legally and illegally and were draining out at least $3.15 billion or Tk 26,400 crore each year.
The NBR in early 2016 formed two regional task forces, one in Dhaka and the other in Chattogram, to develop a database and conduct drives at firms for detecting illegal foreign workers, without any progress in the situation, according to officials.
The activities of the task forces and the other moves have almost fallen flat despite making efforts and due to lack of live data, NBR member (legal and enforcement) Nahar Ferdousi Begum told New Age on Thursday.
‘We have sent a proposal to the Special Branch of the police to share live data with us but the agency is yet to agree,’ she said.
The other initiatives included conducting drives at factories and firms to detect illegal foreigners by the NBR and upgrading the minimum salary structure for foreigners by the Bangladesh Investment Development Authority.
An intelligence agency on August 2 in a letter to the home ministry and the NBR also expressed concern over tax evasions and money laundering by foreign workers taking the advantage of cash payment system and the very low minimum salary structure.
The revenue authority also set up income tax booths at major immigration check posts, including at Hazrat Shahjalal International Airport and the Benapole land port, to verify the tax payment status of the foreign workers during their departure from Bangladesh.
None of the three initiatives has materialised.
The move to review the minimum salary structure, first taken in 2013 by the formerly Board of Investment, now BIDA, is yet to see any success.
The NBR taskforces have not been conducting any drives for the last two years after it found few illegal foreign workers, due to various practical reasons, during earlier drives at a number of business firms, officials said.
No tax officials were deployed either at the income tax booths at the immigration check posts during the period, they said.
The task force concerned and Income Tax Zone Dhaka-11, the dedicated tax office for foreigners, also sought the list of foreign workers for several times from local employers but met with little response.
The database development has been facing impediment as the SB has been declining to provide real-time data about registered foreigners.
The NBR prepared customised software in 2018 to develop the database but it remains useless due to lack of real-time intelligence data as the SB provides three-month old dataset declining to provide real-time data on information security ground.
Bangladesh Police’s special branch deputy inspector general Md Mazharul Islam could not be reached for comments despite several attempts.
NBR member Ferdousi said that it was not possible to detect illegal foreign workers until or unless local employers cooperated, she said, adding that employers kept the illegal workers undocumented and made their payment in kind, instead of by bank transfer.
She said that chasing foreigners to detect illegal workers was not the right way and this measure was practically almost impossible to put to practice.
‘How can the NBR detect illegal foreign workers if the employers claim, when queried by NBR officials, that they are their guests or visitors and if they make payment to them outside of the banking channel?’ she questioned.
The NBR, however, is continuing its efforts to get success, though it will take time, she added.
The government through the Finance Act-2015 introduced a strict penal provision against the unauthorised recruitment of foreign nationals — without the prior approval of the BIDA and other relevant agencies.
An employer will face imprisonment for up to three years along with a fine of up to Tk 5 lakh and withdrawal of tax benefit for such recruitment, according to the law.
So far, the NBR has failed to implement the law though several lakh foreign nationals coming with tourist visa work in Bangladesh, officials said.
There have also been criticisms that the planned moves will create negative impression, including of harassment, among the foreign investors being stopped at the airports and being chased.
The revenue board also doesn’t have the legal mandate to chase a tourist just based on the suspicion that they may work illegally, they added.
Besides the illegal workers, legal ones are also evading income tax with the help of local employers who pay a big chunk of their salaries and other remunerations evading the banking channel to avoid paying income tax at the rate of 30 per cent applicable for the foreign employees, they said.
As per the tax law, an employer should pay the foreign workers their salaries and remunerations above Tk 15,000 a month through bank transfer for getting tax exemption on the payment.
The intelligence agency in its letter commented that the declared salaries and allowances for foreign workers were unbelievable and inconsistent with their education, work experience and status as well as with the country’s overall labour market situation.
‘The salaries mentioned for getting the security clearance for foreign nationals seemed much lower than what they actually receive and they declare low salaries to evade income tax,’ the agency said.
In an investigation it also found that most of the foreign employees receive their salaries in cash and launder money to their country through hand notes.
The agency recommended fixing an acceptable salary structure for giving work permits to foreigners as well as ensuring providing bank account details for security clearance.
The current minimum salary structure for country-wise foreign workers — from technicians to chief executive officer— stipulates very low pays ranging from $650 to $2,000 per month.
The February TIB study found that the declared monthly average salary of a foreigner was only $600 or Tk 50,000 in FY19, though the lowest monthly salary was actually not less than $1,500 in the year.
BIDA executive member Nabhash Chandra Mandal said that they could not revise the salary structure due to differences of opinions among the stakeholders.
While a rise in minimum salary will increase NBR’s tax collection many say that it will increase the outflow of foreign currency, he said.
He, however, said that the BIDA had prepared a draft salary structure by amending the guidelines and that would be finalised soon.
The BIDA said that around 26,000 foreign nationals obtained work permits between 2011 and 2019.
In 2013, India’s largest-circulated technology magazine Siliconindia reported that five lakh Indians were working in Bangladesh who sent $3.7 billion in remittance in the year.
In 2015, a study based on World Bank Remittance Data, conducted by the Pew Research Centre, showed Bangladesh as the 5th largest remittance source for India and more than $4.08 billion was remitted to India from Bangladesh in 2012.
According to the home minister’s statement in the Jatiya Sangsad, 35,386 of the foreigners working in Bangladesh were Indians, the highest from a single country, followed by 13,268 Chinese.
Besides the Indians and Chinese nationals, a large number of people from Sri Lanka, Pakistan, Vietnam and from many European and African countries are also working legally and illegally, especially in readymade garment, textile, buying houses, manufacturing, IT sectors, in Bangladesh.
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