NBR split to fail if corruption persists, warn experts
They warned that a lack of proper coordination between the two new divisions could drastically increase harassment for taxpayers and businesses
(Highlights)
- NBR must eradicate corruption
- It must fully adopt automation
- Staff skills need to be improved significantly
- Formalising informal economy to boost tax collection stressed
- Coordination between two divisions needed to end harassment
The recent split of the National Board of Revenue (NBR) into two divisions as part of its reform will only succeed if the organisation eradicates corruption, fully embraces automation, and significantly improves staff skills, top business figures and experts have cautioned.
They warned that a lack of proper coordination between the two new divisions could drastically increase harassment for taxpayers and businesses.
These concerns were voiced at a roundtable discussion titled "Effective Governance and Implementation of Tax Reform and Tax Administration in Bangladesh," jointly organised by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh at the MCCI office in Dhaka today. The event was attended by members of the government-appointed NBR reform advisory committee, tax experts, and representatives from business and multinational organisations.
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Md Abdul Majid, a member of the reform advisory committee and former NBR chairman, said the initiative to divide the NBR would be unsuccessful without political commitment. He stressed that the NBR must function as a state office, not a mere government department, reminding attendees that ministers, MPs, and secretaries are all taxpayers.
He called for automation using local institutions, arguing that relying on foreign consultants and vendors is unsustainable, as system updates are frequently required. He added that policy should be stable for at least five years, and sudden changes via SROs (Statutory Regulatory Orders) must stop.
Nasiruddin Ahmed, another former NBR chairman on the committee, insisted that all relevant stakeholders must accept the two-division structure and work in a coordinated manner.
He warned that without an "integrated approach," the NBR would remain in the same poor state. Nasiruddin also advocated for initiatives to bring the informal economy into the formal system to boost revenue.
Farid Uddin, also a former NBR member and committee member, revealed that not all of the committee's recommendations were incorporated into the decision to divide the organisation. He predicted that a lack of extensive coordination between the two new divisions would lead to a "terrible situation" for taxpayers and businesses.
Systemic failures and 'simple extortion'
Farid sharply criticised the current system, noting that ASYCUDA in Bangladesh still functions merely as a "calculator" rather than a true integrated system. He labelled the actions of the Customs House as unacceptable, citing that the Chattogram Custom House had increased the valuation of goods on 12,000 Letters of Credit (LCs) in the last six months of the previous fiscal year, collecting an extra Tk8.5 thousand crore in revenue. Farid termed this approach "simple extortion."
He stressed that automation is the only alternative to increase revenue collection and reduce customer harassment, and this system must integrate banks, registration offices, and the BRTA.
Need for investment and private sector involvement
Masrur Reaz, chairman of Policy Exchange Bangladesh, highlighted the urgency of increasing tax revenue to fund necessary government investment in sectors like education, health, and energy, essential for Bangladesh to become an upper-middle-income country.
He noted that the government fell short of its revenue target by Tk92,000 crore in the 2024-25 fiscal year. He called for ICT-based automation and the involvement of the private sector to achieve institutional capacity.
Mohammad Hatem, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), concurred, stating that the problem cannot be solved without automation, noting that the Chattogram Custom House still insists on hard copies of documents.
Inamul Haq Khan, senior vice president of BGMEA, demanded that the NBR be made corruption-free, requiring both automation and genuine government goodwill.
AM Mahbub Chowdhury, vice president of MCCI, Chittagong, said the Chattogram Custom operates in a semi-automated, semi-manual way, leading to significant time wastage. He cited staff shortages and a lack of skills as major impediments.
Sayeed Ahmed Khan, head of Tax at Unilever Bangladesh, stressed that political commitment is paramount and that modernisation requires improving human capital alongside infrastructure.
Muhammad Zahangir Alam, CFO & Finance Director of Square Group, contrasted Bangladesh's complex system with the easy, single-ID tax payment process in Kenya (whose GDP is one-fifth of Bangladesh), proving that mental shift and automation are vital to end corruption.
Snehasish Barua, a partner at Snehasish Mahamud & Co, said taxpayers have to visit multiple offices to complete a single task, which he identifies as a systemic weakness. He argues that automation is needed to eliminate this flaw, along with skill development for the NBR staff.
He further suggested that the VAT system must be sorted out first, as this would simplify the process of fixing Income Tax. He added that the informal economy needs to be formalised, and incentives could be offered to achieve this, if required.
MCCI President Kamran T Rahman pointed out that only 3% of Bangladeshis pay income tax and that the complexity of the system leaves space for corruption. He urged reforms aligned with international standards and the development of a clear roadmap involving both government and the private sector.
MCCI's former president Nihad Kabir, who moderated the session, noted that splitting the NBR alone cannot resolve systemic complexities. She called for reducing excessive regulatory barriers, enhancing automation, and improving the skills of NBR staff.
Harassment by tax officials
Speaking at the event, business representatives highlighted the harassment they face repeatedly when visiting various NBR offices. They identified corruption as a key reason for this.
AM Mahbub Chowdhury said that there are delays in releasing goods due to issues with the system at the Chattogram Custom House. This results in additional costs for port demurrage and ship late fees, he said. Mahbub mentioned that the NBR chairman informed him that the problem lies more with operations than the system itself.
Nihad Kabir shared an anecdote, saying one of her office staff members parked their car beneath the tax office while going to pay tax, only for the police to file a case against them. She questioned why facilities are not made available for taxpayers visiting the tax office.
Md Hatem recounted that a member of his organisation had imported goods held up at the port for 21 days over a very minor issue. The goods were not released because, even though the shipping secretary had issued an order, a hard copy had not reached them, despite the secretary having sent a copy of the order to the customs official via WhatsApp.
