TYPES OF LEVY IMPOSED BY THE GOVERNMENT IN VARIOUS SECTOR: Objective of the study

To achieve the main objective, the study highlights the following specific objectives: 1. To know about the different types of levy that is imposed by government. 2. To point out the main reasons for tax evasion and tax avoidance. 3. To find out the techniques/modes adopted by the corporate firms in evading and avoiding corporate taxes. 4. To identify the authorities responsible for detecting tax evasion and avoidance crimes and the techniques followed thereof. 5. To identify the authorities empowered for disposal of the crime cases and their main functions of responsibilities in such respects. 6. To examine the impact of tax evasion and avoidance crimes on the revenue of the Government in particular and the economy of the country, as a whole. 7. To find out ways and means of preventing tax evasion and avoidance crimes

Limitation:
Shortage of time All the data are no available in the internet

Literature review
The existing literature on this issue is scanty especially in Bangladesh. So far we know, no worth mentioning study was made previously on the issue of tax evasion and tax avoidance crimes in Bangladesh. However, in this section, we may mention the following studies done on tax evasion and tax avoidance practices & its related topics. 1. Tax Planning of Banks Operating in Jordan, Joummah, 1993. The study aimed to find standards to measure the extent of using tax planning by the banks operating in Jordan, and to determine the impact of including a department specialized in tax issues in these banks and also the impact of the banks nationality. 2. Tax Planning of Jordan Industrial Companies Hassen, 1996. The main aims of the study were (i) measuring the extent of conducting tax planning and (ii) measuring the extent of following financial and accounting policies tax planning. 3. Factors Controlling the Pricing Way of the Spent Stock, Shihatta, 1997. The study dealt with the factors that help the administration to choose the right way to price the stock and the impact of tax incentives on choosing the right way of pricing. 4. Tax Planning In Jordan Joint Stock Companies Working in Service sector. Noor and Ibrahem, 1999. The study aimed to recognize the process of tax planning generally and to study the extent of applying it in the companies working particularly in service sector in Jordan. 5. Income Tax Monitoring Means in Yemen Republic, Omer, 1999. The study dealt with tax monitoring in Yemen republic to figure out its weakness points and suggest some means necessary to develop it in order to maintain the rights of public treasury and, on the other, implement tax justice. 6. Addressing tax evasion and tax avoidance in developing countries, GIZ

Sector Programme Public Finance, Administrative Reform; 2010. The findings suggest that there are various reasons and facilitating factors for tax evasion and tax avoidance. In order to develop methods and instruments for fighting tax evasion and avoidance, it is important to establish a broad understanding of the different reasons underlying these problems.

Types of levy Imposed by the government

Chapter-XIX Provisions relating to anti-avoidance of tax
197. General anti-avoidance provision.(1) An avoidance arrangement is an impermissible avoidance arrangement if its sole or main purpose is to obtain a tax benefit and (a) it is entered into or carried out by means or in a manner which would not normally be employed for bona fide business purposes, other than obtaining a tax benefit; (b) It lacks commercial substance, in whole or in part; (c) It has created rights or obligations that would not normally be created between non-associated persons; or (d) It would frustrate the purpose of any provision of this Act (including the provisions of this Chapter). (2) The Deputy Commissioner of Taxes may determine the tax consequences under this Act of any impermissible avoidance arrangement to any person by (a) Disregarding, combining, or recharacterising any steps in or parts of the impermissible avoidance arrangement; (b) Disregarding any accommodating or tax-indifferent person or combining that person with any other person; (c) Deeming persons who are associated persons in relation to each other to be a single person for purposes of determining the tax treatment of any amount; (d) reallocating any gross income, receipt or accrual of a capital nature, expenditure or rebate amongst the parties; (e) Recharacterising any item of income, receipt, accrual, or expenditure; (f) treating the impermissible avoidance arrangement as if it had not been entered into or carried out, or in such other manner as in the circumstances of the case the Commissioner deems appropriate for the prevention or diminution of the relevant tax benefit. (3) The Deputy Commissioner of Taxes may make appropriate compensating adjustments that are necessary to ensure the consistent treatment of all parties to the impermissible avoidance arrangement.

(4) For purposes of this section, an avoidance arrangement lacks commercial substance if it fails to have a substantial effect upon a persons (a) Business or commercial risks; (b) Net cash flows; or (c) Beneficial ownership of any asset involved in the avoidance arrangement, apart from any effect attributable to the tax benefit that would be obtained but for the provisions of this Chapter. (5) For purposes of this Chapter, characteristics of an avoidance arrangement that are indicative of a lack of commercial substance include (a) A legal or economic effect resulting from the avoidance arrangement as a whole that is inconsistent with, or differs significantly from, the legal form of its individual steps; (b) The inclusion or presence of (i) Round trip financing; or (ii) An accommodating or tax indifferent person; or (iii) Elements that have the effect of offsetting or cancelling each other without a substantial change in the economic position of any one or more of the persons; or (c) An inconsistent characterization of the avoidance arrangement for tax purposes by the persons. (6) For the purpose of this Chapter, 'round trip financing' includes any avoidance arrangement in which (a) Funds are transferred between or among the persons (round tripped amounts); (b) The round tripped amounts (i) Would result directly or indirectly in a tax benefit but for the provisions of this Chapter; and (ii) Significantly reduce, offset or eliminate any credit or economic risk incurred by any person in connection with the avoidance arrangement. (7) The round tripped amounts shall apply without regard to (a) Whether or not the round tripped amounts can be traced to funds transferred to or received by any person in connection with the avoidance arrangement; (b) The timing or sequence in which round tripped amounts are transferred or received; or (c) The means by or manner in which round tripped amounts are transferred or received.

Chapter-XI Penalty
132. Penalty for non-payment of tax(1) A taxpayer who fails to pay any tax due under this Act other than penalty imposed under this section by the due date shall be liable for a penalty equal to (a) In the case of the first default, five per cent of the amount of tax in default; (b) In the case of a second default, an additional penalty of twenty per cent of the amount of tax in default; (c) In the case of a third default, an additional penalty of twenty five per cent of the amount of tax in default; (2) Where, in consequence of any order under this Act, the amount of tax in respect of which any penalty imposed under sub - section (1) is reduced, the amount of the penalty shall be reduced accordingly.

Chapter - VIII Gift tax

119. Penalty for default and concealment of facts. (1) Subject to sub - Section (2), where a person intentionally furnishes false information in the return submitted by him to the Deputy Commissioner of Taxes, or intentionally fails to submit a return upon receiving a notice from the Deputy Commissioner of Taxes, the Deputy Commissioner of. - Taxes may impose on the person a penalty up to fifty percent of the gift tax assessed by him and this penalty shall be collectible with the gift tax (2) No such penalty shall be imposed without giving the assessed an opportunity of being heard and without prior approval of the Inspecting Joint Commissioner of Taxes.

Chapter-VI Payment of tax before assessment

92. Levy of interest for failure to pay advance tax. Where, in respect of an assessed that is required to pay advance tax, it is found in the course of assessment that advance tax has not been paid in accordance with the provisions of this Chapter, there shall be added, without prejudice to the

consequences of the assessed being in default under section 91, to the tax as determined on the basis of such assessment, simple interest thereon calculated at the rate and for the period specified in section 93.
.

CUSTOMS ACT
Chapter V LEVY OF, EXEMPTION FROM, AND REPAYMENT OF, CUSTOMS-DUTIES
(1) Except as hereinafter provided, customs-duties shall be levied at such rates as

are prescribed in the First Schedule or under any other law for the time being in force on(a) Goods imported into, or exported from, Bangladesh; (b) goods brought from any foreign country to any customs-station, and without payment of duty there, transshipped or transported for, or thence carried to, and imported at, any other customs-station; and (c) goods brought in bond from one customs-station to another Provided that no customs duty under this Act or other tax leviable by a customs officer under any other law for the time being in force shall be levied or collected in respect thereof, if- (a) in value of the goods in any one consignment do not exceed one thousand taka; and (b) the total amount of such duty and tax does not exceed taka one thousand. (2) The Government may, by notification in the official Gazette, levy, subject to such conditions, limitations or restrictions as it may deem fit to impose, a regulatory duty on all or any of the goods specified in the First Schedule at the rate not exceeding the highest rate of customs duty Explanation: -The rate of regulatory duty on any such goods may be higher than that of the customs duty leviable on those goods as prescribed in the said Schedule provided such regulatory duty does not exceed the highest rate of customs duty of that Schedule.

(3) The regulatory duty levied under sub-section (2) shall be in addition to any duty imposed under sub-section (1) or under any other law for the time being in force. (4) Any notification issued under sub-section (2) shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued.] [18A. Imposition of countervailing duty.(1) Where any country or territory pays, bestows, directly or indirectly, any subsidy upon the manufacture or production therein or the exportation there from of any goods including any subsidy on transportation of such goods, then, upon the importation of any such goods into Bangladesh, whether the same is imported directly from the country of manufacture, production or otherwise, and whether it is imported in the same condition as when exported from the country of manufacture or production or has been changed in condition by manufacture, production or otherwise, the Government may, by notification in the official Gazette, impose a countervailing duty not exceeding the amount of such subsidy. Explanation: -For the purposes of this section, subsidy shall be deemed to exist, if(1) (a) there is financial contribution by a Government, or any public body within the territory of the exporting or producing country, that is, where - (i) a Government practice involves a direct transfer of funds (including grants, loans and equity infusion) or potential direct transfer of funds or liability or both; (ii) Government revenue that is otherwise due is forgone or not collected (including fiscal incentives); (iii) A Government provides goods or services other than general infrastructure or purchases goods; (iv)a Government makes payments to funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions specified in clauses (i), (ii) or (iii) which would normally be vested in the Government and the practice, in no real sense, differs from practices normally followed by Governments; or (b) A Government grants or maintains any form of income or price support, which operates directly or indirectly to increase export of any goods from, or to reduce import of any goods to its territory, and a benefit is thereby conferred. (2) The Government may, pending the determination of the amount of subsidy, in accordance with the provisions of this section and the rules made there under impose a countervailing duty under this sub-section not exceeding the amount of such subsidy as provisionally estimated by it and if such countervailing duty exceeds the subsidy as so determined,-

(a) The Government shall, having regard to such determination and as soon as may be after such determination reduce such countervailing duty; and (b) Refund shall be made of so much of such countervailing duty which has been collected as is in excess of the countervailing duty as so reduced. (3) Subject to any rules made by the Government, by notification in the official Gazette, the countervailing duty under sub-section (1) or sub-section (2) shall not be levied unless it is determined that(a) The subsidy relates to export performance; (b) The subsidy relates to the use of domestic raw materials over imported raw materials in the exported goods; or (c) The subsidy has been conferred on a limited number of persons engaged in manufacturing, producing or exporting the goods unless such a subsidy is for(i) Research activities conducted by or on behalf of persons engaged in the manufacture, production or export; or (ii) Assistance to disadvantaged regions within the territory of The exporting country; or (iii) Assistance to promote adaptation of existing facilities to new environmental requirements. (4) If the Government, is of the opinion that the injury to the domestic industry which is difficult to repair, is caused by massive imports in relatively short period, of the goods benefiting from subsidies paid or bestowed and where in order to preclude the recurrence of such injury, it is necessary to levy countervailing duty retrospectively, the Government may, by notification in the official Gazette, impose countervailing duty from a date prior to the date of imposition of countervailing duty under sub-section (2) but not beyond ninety days from the date of notification under that sub-section and notwithstanding anything contained in any law for the time being in force, such duty shall be payable from the date as specified in the notification issued under this sub-section. (5) The countervailing duty chargeable under this section shall be in addition to any other duty imposed under this Act or any other law for the time being in force. (6) The countervailing duty imposed under this section shall unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition: Provided that if the Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of subsidization and injury, it may, from time to time, extend the period of such imposition for a further period

of five years and such further period shall commence from the date of order of such extension: Provided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the countervailing duty may continue to remain in force pending outcome of such a review for a further period not exceeding one year.

Reasons for tax evasion and tax avoidance crimes

There are various reasons for tax evasion and tax avoidance. These reasons canbe filed in two categories. The first category comprises factors that negatively affect taxpayers complianc ewith tax legislation. These factors can be subsumed either contributing to a low willingness to pay taxes (low tax morale) or to high costs to comply with tax laws. The second category contains reasons for the low ability of tax administration and fiscal courts to enforce tax liabilities. These factors can be summarized as resulting from insufficiencies in the administration and collection of taxes as well as weak capacity in auditing and monitoring tax payments which limit the possibility to detect and prosecute violators. However, the learned respondents of the study have pointed out the following reasons for tax evasion and avoidance crimes: i. Low tax morale ii. Low quality of the service in return for taxes iii. Tax system and perception of fairness iv. Low transparency and accountability of public institutions v. High level of corruption vi. Lack of rule of law and weak fiscal jurisdiction vii. High compliance costs viii. Weak enforcement of tax laws ix. Insufficiencies in tax collection x. Weak capacity in detecting and prosecuting inappropriate tax practices xi. No trust in the government xii. High tax rates xiii. Weak tax administration

Authorities empowered for detecting tax evasion and tax avoidance cases & techniques adopted
Before identifying the specific authority empowered for detecting tax evasion and tax avoidance cases, it is essential to focus on the Tax Authorities in Bangladesh. In Appendix 1, the Tax Authority in Bangladesh has been shown under the title Organogram of Tax Authority in Bangladesh The Deputy Commissioners of Bangladesh have been empowered under the provisions of ITO, 1984.There main functions and responsibilities are: assessing various types of assesses for determining taxable income and tax liabilities, asking for any type of evidences and documents from the assesses in support of their tax return, giving circulars and notices etc. Therefore, the DCTs have been empowered to detect evasion and tax avoidance cases while assessing the tax liabilities of the tax payers.

Techniques followed by DCT in detecting tax evasion and avoidance crimes:

The learned respondents of the study have pointed out that the following techniques have been adopted by the DCT in detecting tax evasion and avoidance crimes: i. Gathering relevant information ii. Remaining constant vigilant of the DCT while assessing any assessess taxable income and tax liability iii. Making thorough bank search of the respective tax payers iv. Intelligent inspections of the books of accounts and others relevant documents of the tax payers v. Critically examining the audit reports of the tax payers vi. Critically examining the Cash Book, Sales Register, Purchase Register, Profit and lose account, Balance Sheet and other relevant documents thereto vii. Critically examining the Import-Export invoices, Latter of Credit and other relevant document thereto.

Authorities empowered for settlement of tax evasion and tax avoidance cases
It is the Appellate and Inspecting Division under the National Board of Revenue which deals with appeal cases of the assessees whether individuals, partnership firms and corporate firms. In the Appellate and Inspecting Division, Commissioner of Taxes, Additional Commissioner of Taxes, Joint Commissioner of Taxes are the authorities empowered for settlement of tax evasion and tax avoidance cases. The aggrieved assessees make an appeal to the Appellate Joint Commissioners of Taxes (AJCT). The AJCTs settle the appeal cases after giving necessary hearing to the respective assessees.

Adverse impact of tax evasion and tax avoidance

Tax evasion and tax avoidance are important insofar as they affect both the volume and nature of government finances. Today, corruption and tax evasion seem to take place in practically every country in the world, and should be considered a potential problem everywhere. Still, evasion and fraud in tax administration are phenomena which hit developing countries hardest (Klitgaard, 1994). Firm evidence on the extent of such illegal practices is naturally hard to come by. But anecdotal evidence from different developing countries indicate that half or more of the taxes that should be collected cannot be traced by the government treasuries due to corruption and tax evasion (Mann, 2004). This erosion of the tax base has several detrimental fiscal effects. The consequences of lost revenue to the funding of public services are of special concern (Tanzi, 2000a). In addition, corruption and tax evasion may have harmful effects on economic efficiency in general (Chand and Moene, 1999; Tanzi, 2000b), and income distribution in particular because the effective tax rates faced by individuals and firms may differ due to different opportunities for evasion (Hindriks et al, 1999). Thus, tax evasion and corruption can make the real effects of the tax system very different from those that the formal system would have if honestly implemented. Transparency International, Bangladesh (TIB) said that an amount of Tk 210 billion in taxes were evaded or defalcated in fiscal 2009-10 which was 2.8 per cent of the countrys national income and one-third of tax revenues collected during the year. The TIB, in its research findings noted, the National Board of Revenue (NBR) could have collected 34 per cent more revenues

than what it did in fiscal 2009-10 if it realized the above-noted tax-evaded or defalcated amount of money. In the study report, the TIB identified tax evasion as a major reason for the countrys poor tax-GDP ratio as indicated in Table 1 of the study. (The Financial Express, 2011)

Ways and means of prevention of tax evasion and tax avoidance

The learned respondents of the study pointed out that the followings are the major ways and means of prevention of tax evasion and tax avoidance: i. Creating awareness of paying taxes for the welfare of the state and its citizens ii. More and more publicity of paying taxes through media about the socioeconomic responsibility of the citizens. iii. Effective implementation of the tax rules and provisions iv. Making stringent rules and provisions of the tax v. Appointing adequate trained and experienced tax officials vi. Empowering tax officials to take necessary panel actions vii. Imposing physical punishment to the tax evaders and avoiders under sections 164 and 165 of ITO, 1984 viii. Imposing high monetary penalty in the form of fines ix. Ensuring access of the tax officials to the bank accounts and relevant software of the tax payers x. Strengthening collection of the requisite data and information from the respective tax payers xi. Measures improving tax compliance by properly educating the tax payers and addressing tax compliance costs and administrative costs. For solving complexities in tax appeal process, the TIB report-2010 suggested for appointment of judges, income tax lawyers and Chartered Accountants as members of appellate tribunals. The TIB study also strongly pleaded for full automation of tax collection system and facilitating e-governance. TIB said the NBR will have to be cautious about maintaining privacy of the taxpayers so that they feel encouraged to show the actual earning. TIB recommended to the NBR to ensure efficiency, transparency and accountability in the revenue board to help boost tax collection

References:
- Chand, S.K. and K.O. Moene. 1999. Controlling fiscal corruption. World Development 27(7), pp. 1129-1140.

- GIZ Sector Programme Public Finance, Administrative Reform; 2010, Addressing tax evasion and tax avoidance in developing countries, Op.Cit. - Hassen, 1996. Tax Planning in Jordan Industrial Companies, Masters thesis. Hindriks, J, M. Keen and A. Muthoo. 1999.