All audit reports have been brought under a single database to stop tax evasion by submitting fake financial reports.
The National Board of Revenue (NBR) and the Institute of Chartered Accountants of Bangladesh (ICAB) have jointly developed a software named Document Verification System, DVS in short, to store the company audited reports.
After auditing a company, chartered accountants will upload the relevant financial statements to the software. The revenue board officials will verify the company's returns submission with the company's original report.
As a result, tax evasion by preparing multiple financial reports could be stopped.
Finance Minister AHM Mustafa Kamal inaugurated the software in the capital Thursday. At the event, the NBR and ICAB also signed an agreement in this regard.
Allegations often run rife against many companies for preparing fake financial statements and submitting them to the NBR. And the revenue board could not detect those as it did not have a specific database.
The launch of the software will enable the revenue board to match the information with ICAB's database. Institutions whose audit reports and information cannot be found in the ISAB database will be labeled risky.
Inaugurating the software, the finance minister said the Document Verification System would play a crucial role in boosting revenue collection, and it will bring transparency in the financial sector and increase efficiency of the accountants.
At the occasion, ICAB President Muhammad Farooq said the number of companies registered with the Registrar of Joint Stock Companies and Firms (RJSC) is 1.76 lakh and 78,000 of them have received taxpayers identification number (TIN).
He said, "Half of the companies submit TIN. However, the number of audited reports by ICAB-designated audit firms is not more than 14,000-15,000. Audit of the remaining companies is just in the paper, often fake to evade tax."
Muhammad Farooq claimed that the new software will enable NBR to identify fake reports instantly. He said though ICAB and NBR jointly launched the software, other institutions including Bangladesh Securities and Exchange Commission, RJSC, Bangladesh Bank, Insurance Regulatory and Development Authority (IDRA) will be benefited from it.
Explaining how the DVS software will work, ICAB Vice-President Mohammed Forkan Uddin said that ICAB members will have to provide almost all the information of their audits to the software from next month.
After providing the information, the software will automatically generate a document verification code against the audited account report. Some general information including the total income and expenditure of the company could be found just by entering the code.
In the meantime, NBR Chairman Abu Hena Md Rahmatul Muneem said that ICAB's database would play a crucial role in restoring order in the entire financial sector. He believes the use of the database would result in transparency in financial reporting.
"Collection of all types of taxes including corporate taxes will increase a lot. Then we can reduce the company tax rate if we want," he added.