Bangladesh’s National Board of Revenue (NBR) is likely to miss its ambitious tax collection target for the fiscal year 2023-24, according to economists and research agencies.
Despite a 16% year-on-year growth in collections for the first 10 months, achieving the BDT 4,100 billion target by 30 June seems improbable.
This shortfall could have significant consequences for the country’s finances. With only two months remaining, the NBR needs to collect BDT 1,206.24 billion to meet the revised target.
Experts attribute the potential shortfall to a slowing economy and government-imposed import restrictions.
While income tax and VAT collections have grown, a significant portion of VAT goes uncollected by businesses. This, coupled with a low tax-to-GDP ratio (estimated at 7.38% in 2022-23), puts a strain on the government’s ability to fund development programmes and manage debt.
Economists propose solutions such as:
- Digitalisation: Investing in the NBR’s digital infrastructure and adopting new technologies can improve efficiency and reduce tax evasion.
- Focus on Direct Tax: Prioritising direct taxes on personal income could generate additional revenue and create a fairer tax system.
- Capacity Building: Enhancing the skills of tax officials is crucial for effective tax collection.
The government is expected to set an even higher target of BDT 4,800 billion for the NBR in the upcoming fiscal year. However, achieving this target will require a comprehensive strategy that addresses the current challenges and leverages digitalisation for a more robust tax collection system.
