This is a partial task of theory and Practices of Taxation course of BBA.

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1.1 Introduction of the study
Most developed countries are characterized by a broad base for direct and indirect taxes with tax
liability covering the vast majority of citizens and firms. Developing countries, like Bangladesh in
contrast, are confronted with social, political and administrative difficulties in establishing a sound
public finance system. As a consequence, developing and emerging countries are particularly
vulnerable to tax evasion and avoidance activities of individual taxpayers and corporations. This
can be considered one of the primary reasons for large differences in the ability to mobilize own
resources between developed and developing countries.
Tax has always been the primary source of revenue for Bangladesh. Government of our country
tries to meet its ever increasing expenditures primarily public service, defense, education,
technology, agriculture, infrastructure by imposing multiple tax on people working and earning
money inside the country. From the year - end report on fiscal position it is found that the total
actual expenditure for the income year 2011 –12 by the government was Tk. 15, 81,900 million
which was 17.31% higher than the last financial year. On the other hand, tax revenue collected by
the Government was Tk. 11, 38,700 million in the financial year of 2011- 12.
As a result, a gap of Tk. 443,200 million exists which our government will have to fill up with
foreign aid and money borrowed from World Bank. Although, the collection of tax revenue has
increased from 2008 to 2012, it is surprising to see that tax gap has also increased every year. It
cannot be denied that our economy is growing every day and more people are now has taxable
income. In such a situation, one of the many reasons why income and expense gap of our country
is not decreasing over the year is the tax evasion tendency of our tax payers. As we pay tax without
the expectation of any direct return, it is obvious that more and more tax payer will lose interest in
paying the Government a portion of their hard earned income when any indirect benefit becomes
difficult to find. Offers such as money whitening facility is not helping either as it discourages
honest tax payers to report and pay appropriate amount of tax. Considering the emergency and
importance of this issue, this research was conducted to share some insight regarding tax evasion
in Bangladesh and also tried to identify possible reasons that influences tax evasion tendency
among current tax payers of Bangladesh.
So, for government needs to create infrastructure and invest in various sectors. For this activities
government needs founds and tax revenue is the main source for the purpose.
Chapter: 01
Introduction

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But due to tax evasion and tax avoidance government’s revenue generation is not sufficient. So,
it is very much important for us to stop tax evasion and avoidance for accelerating economic
development.
1.2 Backgroundof the study:
Tax is the amount which is paid to the government of the state without any direct financial benefit.
But tax must be paid to the government because by this tax government of the state provide
different benefits to the citizen of state. In an ideal word, it is expected that all people in a civilized
society shall pay their fair share of imposed tax. However reality has a different take on that. People
evade paying the right amount of tax for various purpose. Under such circumstances, it is vital to
underpin, the main reason of tax evasion and preventive measures of tax evasion. If tax evasion
can be stopped from our economy, than in future it shall help the government to earn more revenues
and reinvest them in the most effective sectors. This report suggest some measures to be taken to
stop tax evasion from our society.
1.3 Statement of Problems from Study:
This report is a partial task of the course of Taxation and practices in Bangladesh. This report is
mainly for searching the answers of the following questions:
1) What is tax evasion actually means?
2) What is the condition of present tax evasion culture in Bangladesh?
3) What is the effects of tax evasion in economic developments of the developing countries?
4) What is the technique of tax evasion?
5) What is the condition of tax evasion by multinational companies in Bangladesh?
6) Why tax evasion predominates in the economy?
7) What is the conceptual framework of tax evasion?
8) How can we remove tax evasion from our economy?
1.4 Methodologyof the study
The study first attempted to address the gap between total revenue and expenditure. Than we try
to find out the reasons of this gap and tax evasion is one of them reason also it is the main reason
for this gap in Bangladesh. We have less time to complete this report. That’s why did not conduct
any survey or market research. We tried to collect data from many secondary sources.
Researcher usually start by gathering secondary data. We have collect some published information
from different sources. We have collect information from different article, journal and newspaper.
We also collect data from the website of National Board of Revenue.

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1.5 Literature review:
An expansion of the literature and an analysis of various kinds of text books, articles, journal and
common related website in the field of tax evasion in Bangladesh are viewed in study. Tax evasion
is defined by many researcher in many ways. Richardson (2008) defined tax evasion as
“international illegal behavior or activities involving direct violation of tax laws to evade the
payment tax.” Tax evasion is not a modern phenomenon. Plato had written about tax evasion
almost two hundred years ago (Tanzi, 2000). To make things more interesting, tax evasion has
become a worldwide practice among taxpayers around the world. Alfonso Morales, in his research
(1998, pp 383) also indicated that people greatly practice a tendency, to abide by tax terms, when
they deem the tax load or burden, set upon them, as fair and justice. Chen, Been – Lon (2003), has
found in a study that an increase in both unit cost of tax evasion and punishment fines reduced tax
evasion, whereas an increase in tax auditing reduced tax evasion only it the cost of tax enforcement
is not too high. Such an important phenomenon has remained almost unexplored in Bangladesh
till today. There are few literature available regarding this subject matter. Rahman (2005) in his
research indicate that tax evasion is causing a significant amount of revenue loses in Bangladesh.
This report focus on the reason of tax evasion, technique of tax evasion and how tax evasion can
stop from our economy.
1.6 Objective of the study:
The primary objective of the study was to identify factors that influence tax evasion among tax
payers in Bangladesh and find the remedies of the tax evasion.
General objective: To get experienced in tax systems in Bangladesh, to know the gap of revenue
and expense.
Specific objective: The specific objective of my whole study are as follow:
1. To fulfil the requirement of the course “taxation and Practices in Bangladesh”.
2. Identify the factors that has the most influence on tax evasion.
3. Find ways to reduce tax evasion.
4. Suggest government for strong tax administration.
1.7 Limitationof the study
While making this report we had face so many problems. Those are as follows:
 There is very low speed internet in our area. That’s why we face interruption in
collecting data.
 We are suffering very short time limitation. That’s why could not seat in group
meeting more than two or three days.
 Because of lack of huge information this study focused on only selected tax
professionals.

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 Because of busy working period of officials we don’t gather vast information for
this study. In internet this sometimes not possible to collect correct information.
2.1 Definition of tax evasion:
Tax evasion is a way of refusal by individual; household; firms; trust; and other entities of paying
taxes; or tax evasion means not to pay the paying tax by using various illegal ways. Tax evasion
is a severe problem in Bangladesh as huge amount of revenue are being evaded by the tax dodgers.
Businessman who collects VAT from customers also evade tax by under reporting the amount of
sales.
National Board of revenue reveals that tax evasion & incentives cost tk. 40000 crore a year. Tax
evasion and avoidance lead to a parallel black economy of about tk. 9000 to 11000 crore.
2.2 Tax evasionculture:
The very low Tax-Gross Domestic Product (GDP) ratio at around 9 per cent coupled with
the people's tendency to evade paying tax has been a major hurdle before the revenue
administration's effort to fulfill the government's revenue collection target every year. As a
result, the amount of revenue collected annually is too low compared to the population's
actual potential to pay taxes. Small wonder the government has to meet the budgetary gap
through borrowing from banks and foreign aid. A recently conducted study by the
Transparency International, Bangladesh (TI, B) reveals that the government has been deprived
of Taka 210 billion in terms of revenue due to a number of factors that include corruption
among tax officials, high rate of indirect taxes, people's tax evasion habit arising from
complicated procedures, laws in the tax collection system and so on. But of no less
importance is the collusion between the corrupt tax officials and taxpayers. While shortage of
manpower exacerbates the problem further. It cannot be gainsaid that structural laws combined
with manmade factors militate against effective spreading of tax network as well as revenue
targets. . Such a state of affairs calls reform in the tax administration that should include
overhauling tax laws, procedure of tax collection and submission of tax returns. And of
equal importance is effecting a change in the public's attitude towards paying taxes. But the
public's apathy to pay tax is rooted in their psyche--the fear of being harassed and unjustly
exceeded by tax officials. And to a large measure, that fear is also not without its basis.
Still worse is that a section of corrupt tax officials that resorts to underhand dealings with
clients at the expense of the state exchequer. A cleaner and efficient tax administration is a
big boost to the public's confidence in the system. A simplified but electronic tax collection
and submission of returns will further ease, expedite as well as improve quantity and quality
Chapter 02
Definition, Culture & Penalties

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of the revenue collection system. It is hoped that the government would take serious note
of these suggestions. [The Daily Star]
2.3 Penalties for Tax Evasion:
Tax evasion refers to any attempt to avoid payment of taxes owed using illegal means. Every
citizen and business has the right to take lawful steps to decrease their tax liability, including tax
deductions and charitable contributions. However, avoiding payment of necessary taxes through
illegal measures is criminal and will lead to serious consequences.
The common forms of tax evasion are failing to report cash income, reporting less than actual
income, hiding money in overseas accounts and improperly claiming tax deductions. Taking
unauthorized deductions for personal expenses on a business tax return or falsely claiming (or
inflating) charitable deductions are forms of tax evasion. Other types include filing a false tax
return, omitting property, under reporting an estate’s value and overestimating the value of
property donated to charity. Corporations may commit tax evasion by paying employees in cash
and not filing proper returns.
Investigation
After the Internal Revenue Service notifies the taxpayer of suspected criminal behavior with a
letter, phone call or personal visit, an IRS agent can impose penalties immediately or deploy the
Criminal Investigation Division to begin investigating. The CID will conduct a thorough
investigation and has the right to contact friends, employers, co-workers, neighbors and the spouse
of the suspected criminal. They may use a phone tap to track money that is moved to offshore
accounts. To be found guilty in prosecution, the facts must declare that the defendant owed
substantial income tax beyond what was declared on the tax return, and the defendant knowingly
attempted to defeat or evade the tax.
Prosecution
Three crimes could be charged to a citizen or business evading taxes. Tax evasion is a broad
category that includes any cheating on taxes owed to the government. This is a felony and carries
up to a five-year prison sentence and/or fines up to $250,000 ($500,000 for corporations). Filing a
false return occurs when a taxpayer has passed false or misleading information on the tax return
as fact. This is also a felony and can carry a punishment of up to a three-year prison sentence
and/or up to $250,000 in fines ($500,000 for corporations). Not filing a return at all is the least
serious of the three, carrying a maximum of one year in prison and/or fines totaling up to $100,000
($200,000 for corporations). In any case, you will be required to pay any and all taxes owed as
well as all legal fees.

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Considerations
If the taxpayer comes forward and files amended tax returns of their own volition and begins to
pay the debt, the IRS usually does not pursue criminal charges. Also, the IRS tends to be forgiving
of those that volunteer late returns, instead of giving the IRS time to pursue the errant taxpayer.
Prevention
Tax evasion is a crime, so the obvious preventative measure to avoid the crime is to follow the
rules. If you are unable to file on time, request an extension through the IRS. If you still owe taxes
from previous years, it is best to pay on this debt as quickly as possible. Even if you have not filed
taxes in years, it is wise to begin filing now, before the IRS discovers the omission.
3.1 Effects of Tax Evasionin Economic Development:
Tax Evasion has a great impact in economic development. The effects of tax evasion in
economic development are as follows:
 Tax revenue is used to build the infrastructure, to invest in social security
programs, in various poverty elevation programs. Activities are hampered. But due to
tax evasion above the development activities are hampered.
 Tax evasion hamper the social welfare. It obliges the government to borrow loan that
affects the economic development.
 Economic growth is co-related with budget. It is natural that higher government`s
income support to do large budget and large budget helps to accelerate economic
development of a country. But due to tax evasion a lot amount of revenue is not
collected. As a result the government has to shortcut the budget.
Chapter 03
Effects, Conceptual framework& technique of tax evasion

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 In capitalist and mixed economy private sector is supposed to play vital role in
investment and development. But sometimes direct investment by the governments
is necessary. Due to tax evasion the government cannot supply the expected fund for
investment.
 The government has to take various plans for economic development. But lack of fund
the plan cannot be implemented. If the people would not evade tax, the government
could implement the plans.
 Tax evasion also hamper the structural development such as roads, bridge, transportation
& Industrial development etc.
 Government can't ensure the employment opportunity due to tax evasion. Because tax
evasion decrease the amount of revenue collection. Government needs fund t create
employment opportunity.
 Social security can't be provided efficiently because of low fund. Tax evasion is the main
obstacle of collecting fund
 Due to tax evasion a huge amount of tax revenue is lost. As a result the
government cannot provide basic needs for mass people.

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3.2 Conceptualframework of tax evasionin Bangladesh:
Figure 1: Conceptual framework
Intellectual factors
Tax
Evasion
Religion
Gender
marital status
Level of
education
motivational
factor
Ethichs factor
Technique
factor
Knowledge
factor
Employment
status
Income level
No. of
dependents
Demographic factor

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3.3 Technique and modes adopted in tax evading:
SL No. Specific technique and mode
01. Not recording cash transection
02. Under invoicing by importers and exporters
03. Showing benami transection
04. Showing cash credit
05. Showing excessive depreciation
06. Showing personal expenses as business expense
07. Showing excessive wastage of raw materials in production process
08. Showing bogus bad debts
09. Creating reserve & provision for bad debts
10. Making wrong classification of business expenditure as capital and revenue
11. Showing inadmissible expenses as allowable
12. Claiming excessive tax deduction, tax exemption and tax credit
13. Bribing the low morale tax officials
14. Claiming tax holidays which is not genuine in nature
15. Lack of compliance of tax laws and provisions in full
16. Low ability of tax authority both administration and appellate to enforce tax liability
17. Low tax morale of the tax payers
18. Low quality of service provided in return for taxes
19. High compliance cost
20. Weak capacity on the part of tax administration in detecting and prosecuting tax evasion
and avoidance practices of the tax payers
21. Showing revenue income as capital income
Table 1: Technique and mode of tax evasion

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4.1 Tax evasionof individual tax payer in Bangladesh:
www.researchgate.net
Tax is one of the main sources of revenue for any government around the world. If a government
cannot collect tax sufficiently, it fails to meet its obligations towards society both local & national.
The budget deficit due to poor collection of tax revenue hampers social security and development
of the country. One of the reasons government fails to meet its target for tax revenue is that people
tend to evade tax. Gilbert tuxier said, tax and tax evasion are inseparable, like a man and in his
shadow.
We showed here total foreign workers individual who allegedly evaded tax:
The National Board of Revenue (NBR) has declared its intention to go after both the companies
hiring foreign nationals and individual foreign nationals working in the country on the issue of tax
evasion. October 15 is the NBR deadline for employer-companies and individuals to submit their
respective payrolls to the revenue authority. In light of what has been published in the media, we
understand that a taskforce has been set up by NBR that will conduct random visits to chosen
companies to detect any unlawful activities related to tax and also take punitive actions against the
guilty parties. It is hoped that these spot checks will have the desired effect on curbing the
widespread misuse that currently exists with regard to payment of taxes by foreign employees.
The issue of foreign workers' tax evasion has been brewing for some time now. Back in 2015, the
NBR prioritized dealing with foreign workers' tax evasion, and with good reason. By NBR's
estimate back then, many foreigners were working without valid work permits. This has been
going on for some time now. The largest concentration of foreigners working in the country are
employed by the readymade garments sector, followed by NGOs, the hospitality industry,
educational institutions, hospitals and various other industries. Today, it is estimated that there are
some 450,000 foreign nationals, mostly from India, Pakistan, Sri Lanka, China, Taiwan, and South
Korea, followed by some European and African countries, who are employed in the country.
Reportedly, most are thought to be working illegally as only about 11,000 of them are paying taxes
regularly.
4.2 Tax evasionby some MNCs in Bangladesh:
Chapter 04
Tax evasion by Individual, National & Multinational Companies

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More Than 200 Multinational companies (MNCs) have been working in Bangladesh and allegedly
evading the due taxes and ultimately the country is losing a huge amount of revenue because of
evasion. Bangladesh loses US$ 2 billion every year because of the tax evasion & profit shifting by
MNCs. Multinational companies in Bangladesh evade taxes through the abuse transfer pricing or
mispricing in different ways including capital flight, transfer of dividend and profit to its
permanent establishment including under and over- invoicing in transactions of goods and services
within their associated enterprise. [Studies conducted by Tax Justice Network (TJN), United
Kingdom]
4.2.1 about US$ 403 milliontax evaded by four mobile phone operators in
Bangladesh:
According to Bangladesh Telecommunication Regulatory Authority, top four mobile phone
operators Bangladesh evaded taxes of about US$ 403 million (BDT 31 Billion) by selling new
SIM cards in the name of replacement. [The daily Banik Barta, 08/01/2014]
Grameen Phone evaded US$ 203 million what was due against their selling new SIM, but actually
they hid the cost by showing SIM replacement. According to NBR, Grameen Phone sold a total
number of 13,458,354 new SIM but shoed as a SIM replacement and evaded 35% tax & 15% VAT.
Banglalink evaded US$ 99 million of taxes in the same way of Grameen Phone. Robi & Airtel
evaded US$ 89 million taxes by selling new connection in the name of replacement.
Generally a customer is provide a new SIM without taxes when it is replaced for a lost one. But
tax is applicable on a new connection. But Grameen phone, Banglalink, Robi, Airtel provided old
but unused connection to the customers. As a result the number of customer increased but no tax
was required to pay.
4.2.2 BritishAmerican Tobacco Bangladesh (BATB) evaded tax of about US$ 250
million:
According to the ministry of finance, BATB evaded tax about US$ 250 million by making false
price declaration on their two brands i.e. bristle and pilot cigarette during 2009 to 2013. The
company declared their medium level raw materials including tobacco, paper and others as low
level brand in order to evade tax. Even BATB hid the production cost & evaded huge amount
taxes. [Banik Barta, 09/01/2014]
4.3 Tax evasionby some national Companies:
Nine insurance companies have allegedly evaded taxes worth around tk. 110.16 crore as value
added tax (VAT) on commission and reinsurance commission in the last four years.
The insurance companies are Green Delta Insurance, Reliance Insurance Limited, Pragati
Insurance Limited, Pioneer Insurance, Phoenix Insurance Company Limited, Eastland Insurance

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Company Limited, Pubali Insurance, Rupali Insurance Company Limited and State-Owned
Sadharan Bima Corporation etc.
The VAT officials claims that the insurance companies evaded tk. 43.43 crore in VAT at source
on agent commission between 2015 to 2016 and tk. 66.73 crore in VAT on reinsurance commission
from 2013 to 2016 calendar years. The companies will also have to pay 2% interest on the actual
dues for non-payments in times.
The paid commission is taxable according to law, the insurance company have to pay 15% to the
government exchequer on the paid commission. The insurance companies also didn’t pay the 15%
VAT on reinsurance commission, which they received from the other insurance company.
4.3.1 Green Deltainsurance:
Green delta topped the list of companies that evaded VAT at source on agents’ commission with
dues tk. 13.29 crore and also the unit directed Green Delta Insurance has to pay outstanding dues
of tk. 17.59 crore as the company didn’t pay the VAT on reinsurance commission.
4.3.2 Pragati Insurance Limited: Following the Green Delta Insurance Pragati Insurance also
evaded tk. 6.63 crore VAT at source on agents’ commission and also the unit directed Pragati
Insurance to pay outstanding dues of tk. 5.73 crore as the company didn’t pay the VAT on
reinsurance commission.
4.3.3 Sadharan BimaCorporation:
The unit also directed Sadharan Bima Corporation has to pay outstanding dues of tk. 17.42 crore,
as the company didn’t pay the VAT on reinsurance commission.
Following Green Delta & Pragati Insurance Reliance evaded tk. 10.53 crore, Pioneer evaded tk.
5.32 crore, Eastland of tk. 3.60 crore, phoenix of tk. 2.73 crore and Rupali Insurance of tk. 1.33
crore according to the LTU-VAT. The unit also directed reliance has to pay 11.52 crore, pioneer
of tk. 3.70 crore, phoenix of tk. 4.17 crore, Eastland of tk. 4.66 crore and Pubali Insurance of tk.
1.94 crore, as the companies did not pay VAT on reinsurance commission.
This is only the scenery of insurance industry, there are so many companies who didn’t pay their
tax and VAT in proper way. There are many companies who collect VAT from customer but
they didn’t deposit this amount to the state fund, they evaded this tax or VAT by some different
techniques.

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5.1 Reasons of tax evasionin Bangladesh:
(a) Lack of Control by tax administration:
Level of evasion depends on a number of factors which are related with tax administration and
their policy. It is found that people's tendency to evade income tax declines when tax rates are
not excessive or moderate. Evasion also depends on the efficiency of the tax administration.
(b) Corruption by the tax officials:
Corruption by the tax officials often renders control of evasion difficult. Corrupt tax officials
cooperate with the tax payers who intend to evade taxes. When they detect an instance of
evasion, they refrain from reporting in return for illegal gratification or bribe. Corruption by tax
officials is a serious problem for the tax administration in a huge number of underdeveloped
countries.
(c) Lack of morality:
This is one of the major problem in Bangladesh. Some people always try to avoid tax instead of
having vast property or having not any financial difficulties.
More reasons in short
1. High tax rates.
2. Low transparency and accountability of public institutions.
3. High level of corruption.
4. Weak enforcement of tax laws.
5. Weak capacity in detecting and prosecuting inappropriate tax practices.
6. High compliance costs.
7. Low quality of the service in return for taxes.
Chapter 05
Reason and Strategies against tax Evasion

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5.2 Strategies against tax evasion:
As the preceding section indicate, there is a large variety of reasons and factors contributing to a
situation where tax evasion occur on a large scale. Tax evasion may derive from lack of morality,
high tax rates, high level of corruption in tax authority, weak enforcement of tax laws, Endeavors
to maximize profits by reducing tax liabilities, low accountability & transparency of public
administration etc. There is a huge reason behind tax evasion & there is also solution to counter
tax evasion. An effective strategy needs to address the underlying causes and most importantly in
the Context of developing countries - needs to be tailored to the specific country Environment.
Based on the preceding chapters on the reasons and modes of tax evasion, the present chapter
describes potential ingredients of such an effective, country-specific strategy to fight specific
causes and factors contributing to tax evasion and avoidance.
5.2.1. Measures improving tax compliance:
Low tax compliance contributes to a large extent to insufficient revenue mobilization resulting
from to evasion and avoidance of tax payments. It involves voluntary compliance of the single tax
payer but also further aspects like taxpayer’s knowledge on tax procedures necessary for the
fulfillment of her duties. The improvement of citizens’ tax morale requires measures ensuring and
visualizing that the state is acting in a transparent, accountable and efficient manner with the
ultimate aim of providing services for its citizens. These measures go far beyond reforms of the
tax system or administration by developing a sound state-society relationship.
The following description will, however, focus on reforms in the area of taxation:
Taxpayer education and taxpayer service:
The importance of taxes for the functioning of the state is not always apparent to the taxpayer.
Similarly, individual tax liabilities as well as requirements to comply with the tax system such as
filling out different tax forms might be unknown or difficult to understand. By means of taxpayer
education and taxpayer service, citizens can be informed and educated about the tax system and
be assisted in their attempts to comply with the tax system.
Addressing tax compliance costs and administrative costs:
Apart from promoting voluntary tax compliance, governments in developing countries as well as
development partners should concentrate on measures that reduce taxpayers’ costs of fulfilling
their tax liabilities. In this regard, revenue authorities must be aware of the importance of acting
service oriented and should therefore monitor customer satisfaction.

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5.2.2. Measures improving the abilityto enforce tax laws:
Similarly to low tax morale, the ability to enforce taxes is influenced by a broad variety of factors.
Not all of these can be tackled directly by reforms of the tax system or the tax administration. The
following section identifies important measures related to taxation while broader strategies
affecting the environment. Particularly developing countries suffer from the lack of enforcement
of national tax laws that can to large extent be traced back to insufficient administrative capacities.
Addressing weak enforcement at the national level:
Tax administration reforms are a crucial part of any effective strategy to strengthen enforcement
of at the national level. Measures in this area include different approaches of organizational reform
such like the creation of semiautonomous revenue authorities, setting-up of Large Taxpayer Units
as well as capacity development such as trainings and courses on selected topics. Restructuring of
the wage schedule to offer sufficient incentives in order to attract and recruit capable staff and to
minimize the risk of corruptive behavior.

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6.1 Recommendations/Suggestions/Remedies
For reducing tax evasion government can take following steps-
1. Social awareness program:
Create awareness among the people and motivate the wealthy section of the society to pay taxes.
Apart from the NBR, it must be ensured that the tax payers should be free from various compliance
and harassment in tax office while coming to pay taxes. The NBR alignment with the government
concerned department can initiate the motivational campaign in raising consciousness explaining
how regular payment of taxes can serves the nations and ensures justice in the society. They can
take help from professionals like chartered accountants, tax lawyers etc.
2. SimplifiedIncome Tax Systems:
The present income tax system is too complicated to understand. Chartered Accountants, tax
lawyers and related professionals are abusing this complexity. People are likely to go for a personal
assessment discourage by the difficult tax systems. The problem is more acute in a poor country
like ours with high illiteracy and poor record keeping and accounting habits. However, to simplify
the tax systems in 2011-2012 fiscal year policy has proposed to introduce e-tax filling, e-tax
calculator on NBR web etc. The NBR also can introduce online pay systems to reduce the
harassment of the tax payer.
3. Reward and penalty:
Appropriate design of a penalty rate structure also appears to be anti-evasive. The rate of penalty
should be progressively higher with the amount of tax evaded and must also reflect the
current market condition. Regular tax payer must be rewarded for giving due tax timely.
Highest tax payers are proposed to be awarded with a tax card providing civilian VIP status
in all state programs and public facilities.
Chapter 06
Recommendation and Conclusion

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6.2 Conclusion
This report gives an overview of the available knowledge on tax evasion in developing countries
like Bangladesh. The topic of tax evasion represents a problem for developing countries and as
well as for developed countries. In our report we tried to focus on tax evasion culture, effects,
technique and modes of tax evasion, conceptual framework and reason, strategies against tax
evasion. The findings suggest that there are various reasons and facilitating factors for tax evasion
and tax avoidance. These might be categorized into factors that negatively affect taxpayers’
compliance with tax legislation on the one hand and into reasons explaining the weak capacity of
tax administration and fiscal courts to enforce tax liabilities on the other side.
Moreover, developing countries like Bangladesh seem to be especially vulnerable to profit shifting
of multinational enterprises and to the misuse of tax incentives designed to attract foreign direct
investment.

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