Tax evasion in Bangladesh witnessed a sharp increase for more than a decade, according to a Centre for Policy Dialogue survey.
The survey, unveiled on Tuesday, stated that the tax evasion reached about Tk聽2,26,236 crore in the 2022-23 financial year, with the evasion surge beginning in 2012.
At the survey unveiling programme, National Board of Revenue chairman Abdur Rahman Khan said that Bangladesh鈥檚 tax-to-gross domestic product ratio declined to 6.6 per cent in the past financial year of 2024-25 compared with that of 7.4 per cent in FY24.
The survey observed that tax evasion in Bangladesh was caused by high tax rates, weak enforcement, complex laws and widespread corruption within the tax system.
Moreover, these issues, combined with a large informal economy and low taxpayer trust, undermine compliance and encourage evasion practices, it said.
From a tax justice perspective, high levels of tax evasion undermine compliance by discouraging honest taxpayers and increasing the burden on those who follow the law, the survey said.
The Centre for Policy Dialogue in partnership with the Christian Aid Bangladesh organised a dialogue titled 鈥楻eform in corporate tax and VAT: a justice perspective for NBR,鈥� in the capital Dhaka where the survey was launched.
The NBR chairman also said that the widening scope for tax exemptions had been hindering Bangladesh鈥檚 ability to raise its tax-to-GDP ratio, posing a significant challenge to revenue collection.
鈥極ur tax-to-GDP ratio is very low, while public debt is increasing rapidly. We are unable to improve the ratio because granting exemption one after another,鈥� he said.
He later told the media that the figure was based on the International Monetary 鈥楩und鈥檚 calculation and had not yet been finalised.
According to the servery, the tax evasion reached Tk 96,503 crore in 2012 and it jumped to Tk聽1,33,673 crore by 2015.
Assuming 50 per cent of this figure corresponds to corporate tax evasion, the estimated corporate tax evasion in 2023 would amount to about Tk聽1,13,118 crore, the survey said.
Moreover, the value-added tax gap based on the effective VAT rate indicates that even after accounting for existing exemptions, an additional Tk聽1,88,081 crore in VAT revenue was also lost in FY23.
At the seminar, the CPD unveiled the survey based on responses from 123 companies and 389 firms in Dhaka and Chattogram in December past year.
According to the survey, a majority of businesses, about 72 per cent, in Bangladesh, believe that tax officials are widely corrupt.
The survey also stated that 82 per cent of respondents believed that the country鈥檚 tax system was unfair, and about four out of five businesses pointed to a lack of accountability among tax officials.
Moreover, 73.5 per cent of respondents cited the complexity of VAT laws as a key barrier.
Regarding the reforms in the audit process, the NBR chairman said that they had discontinued the manual selection for audits.
鈥楩rom now on, audits will be based on automated systems. In VAT, since automation has not yet been introduced, audits remain suspended,鈥� he added.
Once digital systems are entirely in place, filing tax and VAT returns will become much easier, he added.
He said that the NBR had recently been restructured into two wings 鈥� one for policymaking and the other for tax collection.
鈥楶reviously, the heads of the revenue board spent most of their time on policy issues, leaving little scope for collection efforts. With this new arrangement, revenue collection will get dedicated attention,鈥� he added.
On the VAT reform, he said that, if necessary, they might lower the VAT rate, but it must be uniform across the board.
鈥榃e could have two slabs, but even then, it would remain a single-rate system and we do not intend to enforce a flat 15 per cent VAT, Instead, we want to collect only what is reasonable,鈥� he added.
CPD senior research associate Tamim Ahmed presented the survey results at the event.
In his welcome remarks, CPD research director Golam Moazzem said that Bangladesh had one of the lowest tax-to-GDP ratios in the world.
Christian Aid Bangladesh country director Nuzhat Jabin provided the introductory remarks.