104. Avoidance of tax through transactions with non-residents.-

CHAPTER XI
SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX

104.  Avoidance  of  tax  through  transactions  with  non-residents.- 

Where  any business is carried on between a resident and a non-resident and it appears to the  Deputy  Commissioner  of  Taxes  that,  owing  to  the  close  connection between  them,  the  course  of  business  is  so  arranged  that  the  business transacted between them produces to the resident either no profits or profits less  than  the  ordinary  profits  which  might  be  expected  to  yield  in  that business, the Deputy Commissioner of Taxes shall determine the amount of income which may reasonably be considered to have accrued to the resident from  such  business  and  include  such  amount  in  the  total  income  of  the resident.

105. Avoidance of tax through transfer of assets.-

105.  Avoidance  of  tax  through  transfer  of  assets.-

(1)  Any  income  whichbecomes  payable  to  a  non-resident  by  virtue,  or  in  consequence,  of  any transfer of assets, whether alone or in conjunction with associated operations, shall be deemed to be the income of the person who-

(a) has acquired, by means of such transfer or associated operations, any  right  by  virtue,  or  in  consequence,  of  which  he  has  power  to enjoy, whether forthwith or in future, the income which becomes so payable to the non-resident, or
(b)  has  received  or  is  entitled  to  receive  at  any  time,  for  reasons attributable  to  such  transactions  or  associated  operations,  any  sum paid  or  payable  by  way  of  loan  or  repayment  of  loan  or  any  other sum,  not  being  a  sum  paid  or  payable  as  income  or  for  full consideration of money or money's worth.

(2)  The  income  which  becomes  payable  to  a  non-resident  and  is  deemed under sub-section (1), to be the income of the person referred to therein shall be so deemed for all purposes of this Ordinance, whether such income would or  would  not  have  been  chargeable  to  tax  apart  from  the  provisions  of  this section.

(3)  The  provisions  of  this  section  shall  not  operate  if  it  is  shown  to  the satisfaction of the Deputy Commissioner of Taxes-

(a)  that  neither  the  transfer  nor  any  associated  operation  had  for  its purpose,  or  for  one  of  its  purposes,  the  avoidance  of  liability  to taxation; or

(b)  that  the  transfer  and  all  associated  operations  were  bona  fide commercial  transaction  and  were  not  designed  for  the  purpose  of avoiding liability to taxation.

(4)  Where  any  person  has  been  charged  to  tax  on  any  income  which  is deemed under sub-section (1) to be his income, that income shall not again be deemed to form part of his income for the purpose of this Ordinance if it is subsequently received by him whether as income or in any other form.

(5) A person shall, for the purposes of this section, be deemed to have power to enjoy the income payable to a non-resident if-

(a) such income is in fact so dealt with as to be calculated to ensure at any time for the benefit of such person in any form; or
(b)  the  receipt  or  accrual  of  such  income  operates  to  increase  the value of any assets held by such person or for his benefit; or
(c)  such  person  receives  or  is  entitled  to  receive  at  any  time  any benefit provided or to be provided-
(i) out of such income; or
(ii)  out  of  money  which  is,  or  will  be,  available  for  the purpose  by  reason  of  the  effect  or  successive  effects  of associated  operations  on  such  income  and  on  any  assets representing the income ; or
(d)  such  person  has,  by  means  of  the  exercise  of  any  power  of appointment,  revocation  or  otherwise,  power  to  obtain  for  himself, with  or  without  the  consent  of  any  other  person,  the  beneficial enjoyment of such income; or
(e)  such  person  is  able  to  control,  directly  or  indirectly,  the application of such income, in any manner whatsoever.

(6) In determining whether a person has power to enjoy income, regard shall be had to the substantial result and effect of the transfer  and any associated operations, and to all benefits which may at any time accrue to such person as a result of the transfer and associated operations irrespective of the nature or form of the benefit.

Explanation.- For the purposes of this section-(a) "assets" includes property or rights of any kind and "transfer", in relation to assets being rights, includes creation of those rights;

(b) "associated operation", in relation to any transfer, means an operation of any kind effected by any person in relation to -
(i) any of the assets transferred; or
(ii) any income arising from such assets; or
(iii)  any  assets  representing,  directly  or  indirectly,  any  of  the  assets transferred,  or  the  accumulation  of  the  income  arising  from  such assets;
(c) "benefit" includes a payment of any kind;
(d) references to assets representing any assets transferred, or any income or accumulation of income arising there from, includes references to shares in or obligation of any company to which, or the obligation of any other person to whom,  any  such  assets  or that  income  or  accumulation  of income  is  or  has been transferred; and
(e) any body corporate incorporated outside Bangladesh shall be treated as if it were a non-resident.

106. Avoidance of tax by transactions in securities.-

I.T. Manual, Part-1                                                                                                                                                                                                             [Sec. 106

106.  Avoidance of tax  by  transactions  in securities.-  (1) Where the owner of any  securities  sells  or  transfers  those  securities  and  buys  them  back  or reacquires them, or buys or acquires similar securities, and the result of the transactions  is  that  any  interest  becoming  payable  in  respect  of  the  original securities sold or transferred by the owner is not receivable by the owner, the interest  payable  as  aforesaid  shall  be  deemed,  for  all  purposes  of  this Ordinance,  to  be  the  income  of  such  owner  and  not  of  any  other  person, whether  the  interest  payable  as  aforesaid  would  or  would  not  have  been chargeable to tax apart from the provisions of this sub-section.

(2)  Where  any  person  has  had  for  any  period  during  an  income  year  any beneficial interest in any securities and the result of any transactions within that year relating to such securities or the income thereof is that no income is received  by  him,  or  that  the  income  received  by  him  is  less  than  the  sum which  the  income  would  have  amounted  to  had  the  income  from  such securities accrued from day to day, and been apportioned to the said period, then the income from such securities for the said period shall be deemed to be the income of such person.

(3) Where, any person carrying on a business which consists wholly or partly in dealing in securities buys or acquires any securities from any other person and  either  sells  back  or  re-transfers  those  securities,  or  sells  or  transfers similar  securities,  to  such  other  person,  and  the  result  of  the  transactions  is that  the  interest  becoming  payable  in  respect  of  the  securities  bought  or acquired by him is receivable by him but is not deemed to be his income by reason of the provisions of sub-section (1), no account  shall be taken of the transactions  in  computing  for  any  of  the  purposes  of  this  Ordinance  any income arising from, or loss sustained, in the business.

(4) The Deputy Commissioner of Taxes may, by notice in writing, require any person to furnish him, within such time, not being less than twenty-eight days, as may be specified in the notice, such particulars in respect of all securities of which such  person  was  the  owner,  or in  which  he  had  beneficial interest  at any  time  during  the  period  specified  in  the  notice,  as  the  Deputy Commissioner  of  Taxes  may  consider  necessary  for  the  purpose  of ascertaining whether tax has been borne in respect of the interest on all those securities and also for other purposes of this section.

Explanation.- For the purposes of this section,-

(a) "interest" includes dividend;
(b) "securities" includes stocks and shares; and
(c) securities shall be deemed to be similar if they entitle their holders to the same  right  against  the  same  persons  as  to  capital  and  interest  and  the  same remedies for the enforcement of these rights, notwithstanding any difference in  the  total  nominal  amounts  of  the  respective  securities  or  in  the  form  in which they are held or in the manner in which they can be transferred

107. Tax clearance certificate required for persons leaving Bangladesh.-

107.  Tax  clearance  certificate  required  for  persons  leaving  Bangladesh.-

(1) Subject to such exceptions as the Board may make in this behalf, a person who  is  not  domiciled  in  Bangladesh,  or  a  person  who  being  domiciled  in Bangladesh at the time of his departure is not, in the opinion of an income tax  authority  likely  to  return  to  Bangladesh,  shall  not  leave  Bangladesh without obtaining from the Deputy Commissioner of Taxes authorised in this behalf by the Board.-

(a) a tax clearance certificate, or
(b) if he has the intention of returning to Bangladesh, an exemption certificate which shall be issued only if the Deputy Commissioner of Taxes  is  satisfied  that  such  person has  such  intention;  and  such exemption  certificate  may  be  either  for  a  single  journey  or  for  all journeys within the period specified in the certificate.

(2) The owner or charterer of any ship or aircraft, who issues any authority to any  person  referred  to  in  sub-section  (1)  for  travel  by  such  ship  or  aircraft from  any  place  in  Bangladesh  to  any  place  outside  Bangladesh  unless  such person has a certificate required by that sub-section, shall-

(a)  be  liable  to  pay  the  amount  of  tax,  if  any,  which  has  or  may become due and payable by such person and also to a penalty which may extend to two thousand taka; and
(b) be deemed, for the purposes of recovery of such tax and penalty, to be an assessee in default, and all the provisions of this Ordinance shall apply accordingly.

Explanation.- For the purposes of this section-

(a)  "exemption  certificate",  in  relation  to  any  person,  means  a certificate  to  the  effect  that  such  person  is  exempt  from  the requirement  of  having  a  tax  clearance  certificate  for  the  purpose  of the journey or journeys specified therein;

(b)  "owner"  or  "charterer"  includes  any  representative,  agent  or employee,  who  may  be  empowered  by  the  owner  or  charterer  of  a ship or aircraft to issue an authority to travel by the ship or aircraft; and
(c)  "tax  clearance  certificate",  in  relation  to  a  person,  means  a certificate  to  the  effect  that  such  person  has  no  liability  under  this Ordinance, the Income-tax Act, 1922 (XI of 1922), the ¹[Gift-tax Act, 1963 (XIV of 1963) or দানকর আইন, ১৯৯০ (১৯৯০ সনের ৪৪ নং আইন) or the Wealth-tax  Act,  1963  (XV  of  1963)],  or  that  satisfactory arrangements have been made for the payment of all or any of such taxes which are or may become payable by such person.

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¹ Subs. for "the Gift-tax Act. 1963 (XIV of 1963)" F. A. 1999