Private universities call for unfreezing bank accounts before Eid

The Association of Private Universities of Bangladesh has requested the tax authorities to unfreeze the bank accounts of eight of its members, allowing them to carry out financial activities such as paying salaries, bonuses, and other bills ahead of the upcoming Eid-ul-Fitr.

 In a press release to the media on Monday (1 April), Sheikh Kabir Hossain, chairman of the association, called upon the National Board of Revenue (NBR) to instruct the reopening of the suspended bank accounts.

 It also requested that the NBR refrain from collecting taxes from private universities before a resolution of legal complications.

 The revenue board recently suspended the bank accounts of eight private universities due to their failure to pay taxes.  

The universities are: North South University, American International University, World University, University of Asia Pacific, East West University, Southeast University, Daffodil University, and Independent University.

Md Alamgir Hossain, an NBR member, told The Business Standard, "The accounts have been frozen as per law. Initiatives will be taken to unfreeze the accounts once the institutions apply, paying some amount, even if not the full amount of the due tax."

The bank accounts were frozen from the Tax Zone-11. A senior official from this office, speaking to TBS on condition of anonymity, said, "The institutions whose accounts have been frozen have already contacted us, and some have paid partial or full amounts."

"Only one private university doesn't want to pay," he said, adding, "The rest don't object that much."

According to the press release, the court has disposed of the writ petition regarding the payment of income tax at a rate of 15% by private universities. The full text of the order detailing the observations of the Appellate Division is yet to be published. Even so, the NBR has sent letters to various private universities demanding that they pay taxes.

"Unfortunately, the bank accounts of several universities have been suspended. Suspending the bank accounts before Eid-ul-Fitr without any opportunity to receive the full verdict and take necessary steps regarding the payment of income tax accordingly appears to be an inhumane step. As a result, it will not be possible to pay the salaries, festival allowances, and other bills of a large number of teachers, officials, and employees of the universities," read the release.

The release also mentions that the private university association always strives to conduct all activities of the universities in accordance with the prevailing laws of the country. In this case, the bank accounts have been suspended before the release of the court's full guidelines regarding the payment of income tax according to the Private University Act and the Income Tax Act, which has created anxiety in the private university sector.

The press release points out that according to Section 44(7) of the Private University Act 2010, the money from the general fund of a university cannot be spent for any purpose other than the necessary expenses of the said university. In this case, as the entrepreneur-founders cannot receive any money from the general fund of the non-profit private university recognised by the law, the fact that it is paid as income tax or otherwise spent is also a direct violation of the law. In this case, it is necessary to change the conflicting clauses of the private university law and the tax law through discussions with stakeholders.

"I request the withdrawal of final measures such as not collecting taxes from private universities and suspending bank accounts of universities before Eid, and to give instructions to reopen the suspended bank accounts of all the universities before resolving the legal complications," Sheikh Kabir Hossain said in the press release.

According to a source at NBR, the board has written to 31 private universities on the matter of tax to be paid by them. The bank accounts of eight of these universities have been suspended.

Apart from this, letters have been sent to BRAC University, Notre Dame University, Eastern University, Exim Bank University, Atish Dipankar University of Science and Technology, and several other universities.

According to sources, Deputy Tax Commissioner of Dhaka Tax Zone-11 Md Zahirul Islam Bhuiyan sent a letter to the Registrar of North South University (NSU) on 4 March, requesting payment of tax arrears under Section 214 of the Income Tax Act 2023.

The university was asked to pay a total of around Tk180.51 crore in tax for the last 16 financial years, from 2002-03 to 2017-18. Along with this, it is stipulated for payment by 15 March.

In case of failure to pay tax, it is also mentioned in the letter from the NBR that other legal measures will be taken, including the imposition of fines as per Section 275 of the Income Tax Act 2023.

NSU Vice-Chancellor Professor Atiqul Islam said, "Despite receiving a letter from the NBR for tax payment, no letter has been sent to NSU regarding the suspension of bank accounts. Basically, the matter was conveyed by banks over the phone. I first learned about the suspension of bank accounts from them. As the VAT issue is still pending in the Supreme Court, we have informed the lawyer."