Mr Towfiqul Islam Khan on land valuation

Published in The Daily Star on Tuesday, 14 April 2015.

NBR finds 10,152 rich taxpayers
Each individual has more than Tk 2cr in net wealth

Sohel Parvez

Bangladesh has at least 10,152 people with individual net wealth of more than Tk 2 crore, according to data compiled by the National Board of Revenue.

But taxmen and analysts said the number of wealthy people and the amount of wealth shown by taxpayers should be higher from the viewpoint of property price spirals and the rise in the number of apartments and expensive cars.

The number of the wealthy people will increase if the government calculates the value of lands and apartments on the basis of present market prices, they said.

“The number is very low even for Dhaka city, let alone the entire country. It is likely that there are more than 10,000 apartment owners in the plush areas of the capital,” said Towfiqul Islam Khan, a research fellow at the Centre for Policy Dialogue.

“Lands and apartments are undervalued in Bangladesh,” he said, adding that people in the high-income segment also show the value of their property below the present market prices.

Despite that, the revenue administrator sees increased collection of surcharge on wealth, thanks to rising compliance by rich people.

However, the NBR is yet to compile data on how much surcharge it has collected so far this fiscal year. But taxmen said the amount is expected to rise because of the introduction of two additional slabs for surcharge collection from the current fiscal year.

Under the scheme, a person with net wealth of more than Tk 20 crore but less than Tk 30 crore will have to pay 20 percent surcharge on their payable tax. Those with net wealth of more than Tk 30 crore will be subject to 25 percent surcharge.

The surcharge on wealth was applicable in two slabs until last fiscal year — 10 percent on payable tax of people having more than Tk 2 crore in net wealth and 15 percent for more than Tk 10 crore. The NBR logged Tk 208 crore in surcharge on wealth last fiscal year, up from Tk 101 crore in the previous year.

“It is an indication of economic advancement. People’s wealth and income are rising in line with the economic growth of the country,” said Md Abdur Razzaque, a member of income tax at the NBR.

Taxmen said most of the taxpayers submit tax returns by calculating their wealth on the basis of the registered value of lands and apartments, which remains below the market prices.

“The practice of underreporting is also present in other countries. We are working to reduce it through monitoring,” he said.

The government introduced the surcharge as an alternative to wealth tax to ensure equitable distribution of wealth and reduce economic disparity.

Sajjad Zohir, executive director of Economic Research Group, stressed removing discrepancy between actual purchase prices of property and the registered value of wealth.

“Everyone recognises that the market price of property is way above the registered value.”

In order to bring parity in wealth statements of different groups, revaluation of inherited property such as lands and apartments may be considered, he said.

Md Meftha Uddin Khan, commissioner of Tax Zone 6, said the inclusion of new slabs will contribute to a hike in surcharge collection.

He also said a system of valuation based on the contemporary market prices should be introduced.