Dhaka: Senior government officials, business leaders and policy experts today called for deeper reforms, stronger digitalisation and wider taxpayer coverage to strengthen the country’s revenue system, particularly Value-Added Tax (VAT), as Bangladesh moves into its next phase of economic transition. They made the observations at a discussion on recent progress and persisting challenges in VAT administration and the broader taxation framework, marking the VAT Day and VAT Week 2025 at the revenue board building in the capital.
According to Bangladesh Sangbad Sangstha, Finance Secretary Dr Md Khairuzzaman Mozumder emphasized that VAT holds significant potential as a major revenue source, with several uniform measures introduced over the past year delivering visible results. Although these initiatives initially created difficulties for businesses, the long-term benefits are becoming clear. He noted that the scope of VAT has expanded, as reflected in this year’s budget, with revenue growth reaching 15 percent up to November, surpassing expectations.
NBR Chairman Md Abdur Rahman Khan highlighted the common misconception that businesses pay VAT, clarifying that they collect it on behalf of the government. He explained that import duties ultimately fall on consumers, and Bangladesh must shift towards domestic revenue sources, particularly income tax and VAT. Despite significant leakage in income tax, he said that the effective VAT rate for many businesses could fall below 1 percent if properly implemented.
Rahman underscored the need for digital integration between VAT and income tax systems to prevent leakage. He pointed out that Bangladesh has been slow in achieving paperless customs, with full automation still incomplete after over three decades. Without major reforms, the country may struggle to generate the revenue needed to meet rising expenditures.
Economic Relations Division Secretary Md Shahriar Kader Siddiky praised the NBR’s role in strengthening the revenue system, particularly in VAT collection. He stressed the importance of expanding VAT and income tax coverage for domestic resource mobilisation and noted the necessity of digitalisation to reduce taxpayer-official interactions and promote good governance.
Financial Institutions Division Secretary Nazma Mobarek highlighted VAT’s direct contribution to the national budget and public welfare programmes. Despite rising GDP and per-capita income, she noted that tax buoyancy remains weak. Several reforms have been implemented under the guidance of the Finance Adviser and the NBR Chairman, leading to reduced exemptions and enhanced transparency.
Policy Research Institute (PRI) Chairman Dr Zaidi Sattar discussed the lack of correlation between per-capita income and the tax-to-GDP ratio, pointing to structural weaknesses. He emphasized the need for digitisation and a move toward a cashless economy for transparency and efficiency.
FICCI Vice President Yasir Azman commended the NBR’s progress in digitalisation, noting that these steps form the foundation for the country’s future tax ecosystem. ICC Bangladesh President Mahbubur Rahman stressed the importance of honesty and sincerity from both businesses and officials in the VAT process, asserting that a strong VAT system can drive national development.