The transfer pricing cell of Bangladesh’s National Board of Revenue (NBR) has remained all but dysfunctional since its formation five years back due mainly to a lack of logistical support, insufficient human resources and weak support from the tax authorities according to local media reports.

As in many countries, there are strong suspicions and some evidence that many multinational companies (MNCs) evade tax and transfer funds from the country through the over- and under-invoicing of goods and services within their associated companies.

Dividends and profits are then transferred and distributed to territories with low corporate tax rates.

No audits

According to the New Age Business news site, the cell has not yet been able to conduct any audits on the international transactions of any MNCs to find out if these were accurately recorded and, consequently, whether any taxes have been evaded.

The NBR formed the transfer pricing cell in 2014 in response to legislation introduced in 2013 to scrutinise MNCs’ international transactions in a bid to prevent tax evasion and capital flight by MNCs through transfer pricing.

Failings

Although NBR appointed some transfer pricing officers with additional responsibilities, they are reportedly not dedicated to the cell and remain busy with their regular activities as income tax officials.

According to NBR data, around 85 per cent of MNCs operating in the country do not correctly file tax returns.