High Court Suspends Tax Return Preparer (TRP) Registration Process for Six Months

High Court Halts NBR’s Tax Return Preparer Enlistment Initiative

The High Court of Bangladesh has issued a suspension order on the National Board of Revenue’s (NBR) initiative to enlist Tax Return Preparers (TRP), a move that has significant implications for the country’s taxation system. This decision emerged from a bench comprising Justice Naima Haider and Justice Kazi Zinat Hoque following a hearing on a writ petition.

Background of the Controversy

The controversy began with a notification released by the NBR’s Tax (BCS) Academy on December 14, calling for applications for the registration of TRPs. This notification was in line with the newly formulated Tax Return Preparer Rules 2023. The objective was to streamline the process of tax return filing, particularly for first-time taxpayers, by introducing certified tax return preparers. The deadline for applications was set for January 25, and it was stipulated that an examination would follow for applicants, with successful candidates receiving official certification as tax return preparers.

The High Court decided to suspend the operation of TRP exam for six months
The High Court decided to suspend the operation of TRP exam for six months

Legal Challenge and Arguments

The legality of this notification and the rules underpinning it came under scrutiny when they were challenged by two prominent legal entities: the Bangladesh Tax Lawyers Association and the Dhaka Taxes Bar Association. The case was brought forward by their respective General Secretaries, Md. Khorshed Alam and Md. Tauhid Uzzaman Khan.

Senior lawyer Shah Manjurul Haque, along with lawyers Palash Chandra Ray and Anwar Hossain, presented the case for the petitioners. They argued that the 2023 Income Tax Act, under which this new regulation was framed, does not acknowledge any category as ‘Tax Return Preparer’. Furthermore, they pointed out that the inclusion of ‘Tax Return Preparer’ in the regulation issued on June 26 of the previous year was not congruent with the existing law. They also highlighted the absence of any provision in the law for incentives to tax preparers, which was a significant component of the NBR’s initiative.

The High Court’s Decision

Taking these arguments into account, the High Court decided to suspend the operation of this notification for six months. This suspension effectively halts the registration process for tax return preparers, a move that has been welcomed by many in the legal fraternity as upholding the sanctity of the existing tax law.

Implications of the Suspension

The suspension has broader implications for the taxation system in Bangladesh. Firstly, it underscores the importance of aligning new regulations with the existing legal framework. The court’s ruling emphasizes the importance of meticulously examining new initiatives for legal conformity, especially in vital areas like taxation.

Secondly, the suspension preserves the status quo regarding tax return filing. Lawyers and other professionals who have been traditionally involved in preparing and filing tax returns can continue to do so without the need for new certification or adherence to the proposed TRP system. This is particularly important for maintaining continuity and stability in tax return practices during the current fiscal year.

Reaction from the Legal and Tax Community

The decision has received a variety of responses. While some view it as a necessary check on the NBR’s authority to introduce new regulations, others see it as a setback to modernizing and streamlining the tax return process.

Looking Ahead

As the legal battle unfolds, it is clear that the future of the Tax Return Preparer initiative hangs in the balance. The NBR may need to revisit the drawing board to ensure that any future attempts to reform the tax return process are in strict compliance with existing laws.

In conclusion, the High Court’s suspension of the NBR’s Tax Return Preparer registration process is a landmark decision in the context of Bangladesh’s legal and taxation system. It not only highlights the challenges of introducing new regulations but also reinforces the importance of adherence to the legal framework. The outcome of this suspension and its long-term impact on the country’s taxation practices remain to be seen.

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