NBR in flux: Can trust be rebuilt?

Infograph:TBS

As part of its reform drive, the interim government faced a major jolt back in May after issuing an ordinance abolishing the National Board of Revenue (NBR) and splitting it into two divisions – Revenue Policy and Revenue Management.

Following the move, customs and income tax cadre officials within the NBR alleged they were sidelined in leadership and key decision-making roles, accusing the government of "strategically handing over authority to administration cadre officers." This triggered protests that gradually escalated to near paralysis of sea and land ports. 

At one point, the government responded firmly, suspending at least 36 officers and forcing five into retirement — an unprecedented development in Bangladesh's revenue administration.

In addition, over the past six weeks, more than 400 officials have been transferred. While large-scale reshuffles after the national budget are not unusual, this year's numbers are far higher, sparking widespread debate.

Altogether, the institution that collects nearly Tk4 lakh crore in revenue is now plagued by fear and distrust among field-level officers. Many are anxious — who will be targeted next? Who will be suspended or summoned by the Anti-Corruption Commission? Who will be transferred to a remote posting or made an OSD (Officer on Special Duty)?

At the NBR headquarters in Agargaon and in field offices, officials avoid the press. Even familiar officers refuse to talk, neither in person nor over the phone.

The question is: are these disruptions with the NBR aimed at blocking reforms, or are they simply turf wars over who controls authority?

On the surface, officials seem to have little objection to the separation of the NBR. The real dispute lies in who holds sway over the two newly created divisions.

As government officials, they could have pursued formal channels to register objections. Instead, the recent protests by NBR officers appear to have crossed certain limits.

Initially, when officials engaged in brief work stoppages or "pen-down" strikes, taxpayers, businesses, and service-seekers were not severely affected. The real crisis erupted when they declared a "complete shutdown" of imports and exports, instructing colleagues nationwide to gather in Dhaka.

On 28 and 29 June, the country's key trade gateways — Chattogram Port, Dhaka Customs House, and Benapole — came to a standstill. This rattled businesses and sent a damaging signal about Bangladesh to the outside world.

At that time, one business leader said, "Except during war, I have never seen ports completely shut down like this."

The government had no option but to crack down. Still, the damage was already done: trade disruptions inflicted financial losses on businesses, while the state lost valuable revenue.

Why reform the NBR?

Five decades since independence is no short span of time. Countries like Malaysia, which stood at a similar economic position as Bangladesh forty years ago, are now far ahead. Bangladesh, meanwhile, remains heavily dependent on development partners.

One stark example is taxation: the country's tax-to-GDP ratio is just over 7% — among the lowest in the world.

For over two decades, there has been talk of automation in revenue collection. Huge sums have been spent, yet progress remains minimal. Income tax, VAT, and customs processes are still highly dependent on human intervention — raising costs for taxpayers and leaving room for harassment. 

At the same time, collusion between dishonest officials and tax-evading businesses results in massive revenue leakage. A section of influential players also secures hefty exemptions through pressure and lobbying.

According to NBR's own estimates, the government forgoes almost as much revenue through tax exemptions — known as tax expenditure — as it manages to collect.

Against this backdrop, development partners, including the IMF and World Bank, have long advised reforms to ensure compliance in Bangladesh's tax system. 

The business community echoes the same demand: those who design tax policy should not also be responsible for collection or dispute resolution. In other words, policy and implementation must be separated.

The government moved in that direction — the intention was sound. But disputes arose over who would lead the newly separated structures.

In Bangladesh, NBR leadership has traditionally been in the hands of the administration cadre. This is not unique to the NBR — many other cadres are also dominated by administration officers, fueling inter-cadre resentment and creating discomfort for the government.

NBR officials allege that even in the latest ordinance, provisions were crafted in such a way that administration cadre officers would again end up holding authority over the two divisions.

"Structural reforms to modernise the revenue administration and broaden the tax base were necessary, but the steps taken have been piecemeal. Even the move to split the NBR has stirred controversy, with officer discontent and lack of transparency deepening the confidence crisis. Rather than driving the desired reforms, these actions have fueled uncertainty," said Selim Raihan, a professor of economics at Dhaka University.

Will the ordinance amendment rebuild confidence?

On Thursday, the Advisory Council approved amendments to the much-debated "Revenue Policy and Revenue Management (Amendment) Ordinance 2025. 

It now specifies that leadership of the Revenue Management Division must come from experienced revenue officials, clearing the way for NBR cadres – customs and tax – to take charge, where previously it was only a matter of "priority."

For the Policy Division, however, the government has kept it open, allowing either administration cadre or NBR cadres to be appointed. 

Insiders say this partially meets NBR officials' demands and validates at least some of their concerns, though questions remain among sections of officers.

Former NBR member and Reform Committee member Farid Uddin told TBS: "The officers' demands were logical. The dominance of other cadres in the NBR is not justified. But the way they protested was not appropriate. Now it is the state's responsibility to restore trust—because revenue is no small matter."

Still, confidence-building will not be easy. 

Many officers facing suspension or forced retirement are known to be honest. If such individuals are punished merely for participating in protests, integrity in the NBR will be undermined, indirectly encouraging corruption.

On the other hand, the dismissal and arrest of a high-profile tax commissioner, Matiur Rahman, on graft charges is seen as only the tip of the iceberg. Business leaders, too, have begun publicly questioning the integrity of revenue officials.

Experts stress that while a tough stance against corruption is essential, it must be paired with incentives for good performance to avoid creating a culture of fear. They caution that revenue collection cannot be raised to desired levels through intimidation alone.

With budget deficits widening, reliance on domestic and foreign borrowing growing, and Bangladesh set to graduate from LDC status soon, boosting revenue is unavoidable. 

This will require rebuilding not just officials' confidence, but also taxpayers' trust—protecting honest taxpayers while clamping down hard on evasion.