The National Board of Revenue (NBR) has initiated measures to improve Bangladesh’s tax-GDP ratio, aiming to break free from the persistent culture of deficit budgets that has plagued the country since independence.
“Increasing the tax-GDP ratio remains a significant challenge for the NBR,” said an official document. “There is no alternative to bolstering internal revenue to overcome this challenge. A welfare-oriented and people-friendly income tax reform is crucial to achieving this objective.”
The NBR is committed to implementing a tax policy that is favourable to taxpayers, businesses, and investments, with the goal of establishing a robust tax culture in the country. Central to this policy is the gradual reduction of the tax burden through economic investment, increased tax-GDP ratio, and enhanced taxpayer compliance.
The document highlighted ongoing efforts to increase the contribution of direct taxes to 42% of total revenue by 2031 and 50% by 2041 through the enactment of taxpayer-friendly income tax policies. These efforts are supported by digital transformation initiatives, the expansion of the tax net, and the strengthening of administrative capacity to boost revenue collection from domestic sources.
Despite these efforts, a senior NBR official acknowledged the challenges in meeting the country’s financial needs. “As a developing nation, we are revenue-hungry and unable to meet the national exchequer’s demands,” he said.
Currently, Bangladesh’s tax-GDP ratio stands at 7.3%, significantly lower than neighbouring countries such as India (12%), Nepal (17.5%), Bhutan (12.3%), and Pakistan (7.5%).
Newly appointed NBR Chairman Md Abdur Rahman Khan, in a recent meeting with senior officials, stressed the urgent need to focus on increasing the tax-GDP ratio and improving tax collection.