Doulot Akter Mala

The government plans to create a Medium Taxpayers Unit (MTU) to have greater focus on the medium level taxpayers for boosting income tax collection.

The new unit will work under the Large Taxpayers Unit (LTU), which will give attention to increase tax collection.

"The proposal to set up the MTU came under the TACT (tax administration, capacity and taxpayers services) project," said a senior income tax official.

The National Board of Revenue (NBR) will implement the TACT project by this fiscal with the financial support of Department for International Development (DFID), he said.

The aim of the TACT project is to increase the number of income taxpayers to 5.0 million by next five years, he added.

It is necessary to give focus on some medium potential sectors to boost tax collection, he said.

Ship breaking and Pharmaceuticals can be monitored closely as fast growing sectors, he said.

"Income tax collection will be doubled if the government brings 2500 large and medium taxpayers under those units," he added.

Currently, LTU is dealing with only 987 individual and corporate taxpayers. The country's all commercial banks, and insurance and leasing companies are paying income tax under the LTU.

Taxmen can easily monitor the medium taxpayers and conduct one-to-one discussion, the official said.

"We have prepared a work plan for setting up the new unit in line with the model of other developed countries that achieved significant success in income tax collection," he said.

The proposal came as a part of revenue board's move to expand the LTU in other cities to increase revenue collection, he said.

There is a plan to expand LTU in Chittagong to monitor a number of large and medium taxpayers in the port city, he added.

LTU is the brain-child of International Monetary Fund (IMF), which has suggested the government to expand the unit across the country to enhance tax collection.

Tax collection of the LTU almost doubled in the last two years. The LTU collected Tk 22.50 billion in 2005-06 fiscal. It stood at Tk 40.42 billion in 2007-08.

Of LTUs collection, corporate taxpayers contribute 72 per cent while individuals pay 28 per cent.

"More than 100 corporate taxpayers have been enjoying tax exemption or tax holidays," said a senior official of LTU.

"It is necessary to bring more corporate houses and individuals under the jurisdiction of LTU to reduce risk-factor in achieving revenue collection target," the official said.

The government is considering inclusion of fast growing and profit-making sectors in the MTU, he said.