Summit denies tax evasion allegations, terms media reports 'baseless'

Highlights

• Allegations suggest discriminatory tax exemptions and failure to deduct tax at source during dividend remittance, which Summit denies
• Summit clarifies that its projects benefit from exemptions under the 2010 Power and Energy Act, applicable to 104 projects, of which only three belong to Summit
• The company urges media and stakeholders to act responsibly to preserve investor confidence and support national progress

Summit Group has strongly refuted allegations of tax evasion made by the National Board of Revenue (NBR), describing recent media reports on the matter as "completely baseless and irresponsible."

In a statement released today (24 December), the conglomerate emphasised its adherence to Bangladeshi laws and commitment to transparency in its business operations. 

Summit also pointed out that neither the NBR nor the Central Intelligence Cell has officially notified the company of any tax-related investigations or allegations, reports UNB.

The group pointed out that recent media reports, citing an unnamed official, claimed that the Central Intelligence Cell had found discriminatory tax exemptions granted to Summit. Allegedly, other power generation companies were not afforded similar benefits, it said.

Summit Corporation Limited — based in Bangladesh and controlled by Summit Power International Limited, which is registered in Singapore — has also been accused of failing to deduct tax at source while remitting dividends, adds UNB. 

Summit clarified that all its power plants and other infrastructure are located in Bangladesh and are owned and operated by Summit Corporation Limited.

"The accounts of Summit Corporation and Summit Power International are audited by reputable international auditors. Moreover, Summit is paying taxes with guidance from renowned Bangladeshi legal consulting firms such as Moudud Ahmed & Associates and Barrister Rokanuddin & Associates," the statement reads.

Summit dismissed the allegations of tax evasion, asserting that tax exemptions are provided to the power and energy sectors of Bangladesh under the Rapid Increase in Supply of Power and Energy (Special Provisions) Act, 2010. So far, 104 projects have been included under this act, with only three being owned by Summit, the statement said.

Two Summit companies evade Tk1,100cr in taxes, NBR alleges

"As a responsible organisation, Summit Group has a proven track record in power and energy supply in Bangladesh. Summit Group has always operated in Bangladesh (Summit Corporation) and Singapore (Summit Power International), adhering to the laws of both countries," the statement added.

Summit further expressed its commitment to contributing to the development and prosperity of Bangladesh, stressing that its operations in the country have always been in line with the law. The group also expressed pride in maintaining the highest standards of integrity and corporate governance.

The statement claimed that Summit Group has attracted significant foreign direct investment into Bangladesh and has made substantial contributions to the development of the country's power and energy infrastructure.

"We urge the media and stakeholders to exercise more responsibility in providing important opinions, so that the law can take its course. Our responsibility will help maintain the confidence of international investors, which is essential for Bangladesh's long-term development," Summit said.

NBR's allegation 

The Central Intelligence Cell had alleged that two Summit companies evaded Tk1,112 crore in source taxes related to dividend transfers.

Summit Corporation Limited, which owns shares in Summit Power Limited, allegedly evaded 20% source tax on dividend payments. Besides, Summit Power International, a Singapore-listed entity holding shares in Summit Corporation, is alleged to have evaded a 15% source tax on its dividends.

Barrister Mutasim Billah Faruqui, commissioner of taxes, Taxes Zone 2, had told TBS that they had requested the NBR to review source tax exemptions provided to the two Summit companies.

"Upon taking charge of the tax zone, we noticed that these taxpayers were receiving special facilities, creating a sense of discrimination among others in the same sector," he said.

He further explained, "We found that Summit was benefiting from source tax exemptions – benefits that were not properly documented or maintained. This prompted us to request the NBR to review the matter."

These facilities were issued under circumstances that may have involved external pressure on NBR officials, Faruqui added.

According to Section 117 of the Income Tax Law 2023, Summit Power was supposed to deduct 20% of source tax during the transfer of dividends to Summit Corporation.

Under Article 11, Para 2 of the Double Taxation Avoidance Agreement, Summit Corporation was required to deduct source tax at 15% during the transfer of dividends to non-resident company Summit Power International.

However, the previous administration issued two separate clarifications to the conglomerate exempting Summit Power International and Summit Corporation from source tax on dividend transfers, according to NBR sources and documents obtained by TBS.