82% businesses find current tax rate unfair, a major challenges: CPD study
The study has also found that 65% of businesses reported persistent disputes with tax officials regarding the calculation of their payable tax amounts
Highlights
- 79% cite lack of accountability among tax officials
- 65% face disputes over tax calculations
- 45% were asked for bribes in FY23
Around 82% of businesses believe the current tax rates imposed on them are unfair, identifying this as one of their major challenges, according to a study by the Centre for Policy Dialogue (CPD).
In addition, a lack of accountability among tax officials, widespread corruption, and the absence of a fully digital tax submission system were cited as key concerns by 79%, 72%, and 70% of respondents, respectively, showed the study.
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The study, titled "Corporate Income Tax Reform for Graduating Bangladesh: The Justice Perspective", was unveiled at a press briefing at the CPD office in Dhaka today (21 April).
The study suggests that tax evasion in Bangladesh reached approximately Tk226,236 crore in 2023, with corporate tax evasion accounting for an estimated Tk113,118 crore.
Tax evasion began rising notably in 2011, with estimates climbing to Tk96,503 crore in 2012 and more than doubling to Tk133,673 crore by 2015, it finds.
Furthermore, the CPD study also found that 65% of businesses reported persistent disputes with tax officials regarding the calculation of their payable tax amounts.
The issue was echoed by many interviewed business leaders, who claimed that tax officials often impose arbitrary tax assessments without proper justification or prior communication. Such practices, they argue, create an intangible burden that often outweighs the tax itself, making the overall tax practice unfair, according to the study.
Moreover, there is a prevailing sense of distrust among the surveyed business entities regarding the extent to which their paid taxes will be utilised in ways that benefit their businesses.
The CPD said primary data for the study, conducted in December 2024, was collected through a survey of 123 companies located in Dhaka and Chattogram.
The survey sample was structured to reflect the sectoral distribution of Bangladesh's capital market, ensuring the inclusion of a broad range of industries.
Complexities in tax process
According to the study, on average, a company in Bangladesh spends 5.27% of its total tax paid on preparing tax return-related materials and completing the submission process.
In terms of time, the survey finds that it takes an average of 34.2 days for a company to prepare the necessary tax-related documents.
However, the maximum time taken by a company was found to be as high as 180 days, supporting stakeholders' observations that the complexity of the tax structure and preparation process contributes to significant delays.
The survey also reveals that resolving a tax dispute in Bangladesh takes an average of 93.2 days, with some cases being resolved in as little as three days and others taking up to 600 days.
Around 40% of the surveyed companies reported facing problems while adjusting their tax refunds, indicating inefficiencies and delays in the refund process.
Additionally, 45% of the companies stated that they were asked for a bribe by tax officials in FY23, highlighting a lack of transparency and corruption within the tax administration.
