The National Board of Revenue plans to set up a separate unit for multinational companies (MNCs) to provide hassle-free services to foreign firms doing business here, said a senior official yesterday.

Likely to be named “International Taxpayers' Unit (ITU)”, the wing will also allow taxmen to curb the scope of illicit fund transfers for tax avoidance and tax evasion through transfer pricing and other means, said the official.

The move comes based on proposals from the EU-Bangladesh Business Climate Dialogue held last year.

“This will ensure better services for foreign taxpayers. We have agreed in principle to form the unit where multinational companies will be able to submit returns for tax assessment and do other formalities,” he said.

The unit would also be helpful in avoiding cases of arbitrary disallowance of expenses by taxmen at field offices.

At present, nearly 700 foreign companies are in operation in Bangladesh, including 204 members of the Foreign Investors' Chamber of Commerce and Industry.

A number of multinational firms carry out their tax related formalities at Large Taxpayers Unit while many foreign firms, particularly small and medium enterprises (SMEs), submit tax returns to different tax zones. The official said all multinational companies would come under the ITU's purview once it was established. The issue of the ITU is likely to be discussed in the upcoming EU-Bangladesh Business Climate Dialogue, he said.

“The unit will support a more business-friendly environment for foreign SMEs in line with the objective of the government,” he said. The tax administration last month assigned officials as “focal points” of its field offices aiming to provide tax related information to foreign SMEs and prospective foreign investors regarding tax related provisions, incentives and business processes.

The official said the NBR plans to frame a comprehensive reform proposal to ensure better services and increase tax collection. The reform proposal is likely to include a scheme for the establishment of a dedicated “e-TDS zone” for collecting source or withholding tax at source alongside a taxpayer information unit, he added.