Taxes to be increased reasonably in upcoming budget: NBR Chairman

The Chairman of the National Board of Revenue (NBR), Abdur Rahman Khan, has announced that taxes will be increased reasonably in the upcoming national budget, emphasising the urgent need for higher revenue collection to sustain development in the country.

Speaking at a pre-budget discussion with business leaders at the Chattogram Chamber of Commerce and Industry (CCCI) on Thursday afternoon (10 April), Khan addressed concerns over the country's low tax-to-GDP ratio, calling it "one of the lowest in the world" and "humiliating." 

He warned that a reduction in tax rates would cause a significant revenue shortfall, which Bangladesh cannot afford under the current circumstances.

"Revenue is vital for development," he stated. "We are under immense pressure to increase revenue collection; if we fail we will fall behind in ensuring progress."

The discussion was chaired by CCCI Administrator Muhammad Anwar Pasha and attended by a range of prominent business leaders including Khalilur Rahman, President of the Chattogram Metropolitan Chamber of Commerce and Industry; Abida Mustafa, President of the Chattogram Women Chamber of Commerce and Industry; Maksudur Rahman of the Bangladesh Furniture Manufacturers Association; Saleh Ahmed Solaiman of the Bangladesh Shop Owners Association; Showkat Ali, General Secretary of the C&F Agents Association; and others.

Explaining the tax system with an analogy, the NBR Chairman said, "A country is like a family—those who earn more contribute more, and those who don't earn receive pocket money. Similarly, we collect taxes and try to serve the marginalised."

He revealed that of the 1.45 crore registered taxpayers in Bangladesh, only 45 lakh actually pay taxes, with 30 lakh of them paying zero tax. However, he highlighted progress through digitisation, noting that 15 lakh tax returns were submitted online this year—up from 4 lakh last year.

In response to requests for reduced VAT, Khan expressed openness to a uniform VAT rate. "We're ready to reduce VAT, but it must be a single rate across all goods and services. Businesses must also commit to accurate VAT payment," he said. He also mentioned the NBR is considering switching from monthly to quarterly VAT audits and further automating the VAT system for convenience.

The chairman criticised the misuse of bond facilities, where raw materials are imported under tax-exempt status meant for export-oriented industries but are often diverted to the local market. He cited gold as a prime example, saying, "There's no official record of gold imports, yet tonnes are available in markets. This clearly reflects misuse of the bond facility and baggage rules."

Khan also pointed out the widespread use of under-invoicing in sectors like the reconditioned car market. "When a car imported at Tk 15 lakh is sold for Tk 40 lakh, it's clear there has been under-invoicing. This is why we are forced to impose a 500% duty," he explained.

Addressing criticism over duties on ships imported for recycling, he said, "It may sound illogical, but if we remove these duties, ships will arrive with more oil than actual weight of the ships. The problem is a widespread tendency to misuse facilities."

In response to various demands from business leaders, Khan said, "We are considering most of the suggestions rationally and hope to reflect them in the upcoming budget."

At the meeting, Khalilur Rahman called for a reduction in duties on capital machinery such as cranes, noting that the rate had been raised from 1% to 27% last year. He stressed that bringing it back down would support industrial growth.

CCCI Administrator Muhammad Anwar Pasha placed around 16 budget recommendations on behalf of the business community. These included simplifying the tax and VAT systems, monitoring bond usage, exempting small entrepreneurs from Tax Deducted at Source (TDS), ensuring timely refunds of Advance Income Tax (AIT), and bringing VAT down from 15% to a single-digit rate of 8%.