Restructuring NBR essential to raise tax-GDP ratio, improve efficiency: CA Office
Established over fifty years ago, the NBR has consistently failed to meet its revenue targets, says the press wing
Highlights:
- Combining tax policy-making and enforcement under one body created conflicts of interest
- Lack of accountability has led to irregularities and leniency toward tax evaders
- Poor governance and overlapping bureaucracies weakened tax administration and investor trust
- The reform separates policy and enforcement into two divisions to improve performance
- The new system aims to reduce dependence on indirect taxes and improve direct tax collection
- Transparent, evidence-based tax policies are expected to boost investor confidence and fairness
Bangladesh must raise its tax-GDP ratio to at least 10% and restructuring the National Board of Revenue (NBR) is essential to achieving this goal, said the Chief Adviser's Office (CAO) today (13 May).
In a statement shared on the CA's verified Facebook page, the CA Press Wing stated that the NBR, which was established over 50 years ago, has consistently failed to meet its revenue targets.
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"Bangladesh's tax-GDP ratio is approximately 7.4%, one of the lowest in Asia. For context, the global average is 16.6%, while Malaysia's stands at 11.6%. To achieve the development aspirations of its people, Bangladesh must raise its tax-GDP ratio to at least 10%," reads the statement.
It said the decision to dissolve NBR aims to separate tax policy-making from tax administration to improve efficiency, reduce conflicts of interest, and broaden the country's tax base.
"There is growing consensus that a single institution should not be responsible for both creating tax policy and enforcing it—such an arrangement breeds conflicts of interest and promotes inefficiencies," said the CA's press wing.
It noted that for years, businesses in Bangladesh have complained that policies have often prioritised revenue collection over fairness, growth, and long-term planning.
The statement details a number of longstanding problems that have affected the NBR.
Conflict of interest
Housing both policy-making and enforcement under one roof has led to compromised tax policies and widespread irregularities. Under the current system, officials responsible for tax collection are not subject to any accountability framework and are often able to negotiate payments from tax defaulters, compromising public interest.
In many cases, tax collectors are reluctant to take action against tax evaders and assist them in doing so for personal interest.
There is no system and process in place to objectively measure the performance of tax collectors and their career progression has not been linked with measurable performance indicators.
Inefficient revenue collection
The dual mandate diluted focus on both policy formulation and institutional capacity-building. As a result, the tax net remains narrow, and revenue collection has lagged far behind potential.
Weak governance
The NBR has suffered from inconsistent enforcement, poor investment facilitation, and systemic governance issues, all of which have eroded investor confidence and weakened the rule of law.
Bureaucratic overlap
The existing structure, where the head of the Internal Resources Division also leads the NBR, has created confusion and inefficiency, hampering effective tax policy design and delivery.
Demoralisation and internal tensions
The reform process has triggered anxiety among seasoned tax and customs officers, some of whom feel they may be sidelined or overlooked.
How the restructuring will help
The new structure is designed to address these chronic problems through a clearer, more accountable framework:
Clear division of responsibilities
The Revenue Policy Division will be responsible for drafting tax laws, setting rates, and managing international tax treaties. The Revenue Management Division will oversee enforcement, audits, and compliance. This separation ensures that the officials setting tax obligations are not the same as those collecting them, eliminating opportunities for any sort of connivance.
Improved efficiency and governance
By allowing each division to focus on its core mandate, the reform will enhance specialisation, reduce conflicts of interest, and improve institutional integrity.
Expanded tax base and stronger direct taxation
The reform is expected to broaden the tax net, reduce dependence on indirect taxation, and strengthen direct tax collection by placing skilled professionals in appropriate roles.
Better, more development-oriented policies
A dedicated policy unit can craft evidence-based, forward-looking tax strategies instead of reactive policies driven solely by short-term revenue goals.
Greater investor confidence
Transparent, predictable policies and a professional tax administration are expected to attract investment and reduce complaints from the private sector.
Ultimately, this restructuring is not just a bureaucratic reshuffle — it's a necessary step toward building a fairer, more capable tax system. Strengthened policy-making and cleaner tax administration will be vital for Bangladesh to meet the needs — and realise the hopes — of all its citizens.
