Govt dissolves NBR, creates policy, tax realisation units

The British colonial administration established a revenue board in 1924 to collect land tax across the Indian subcontinent. The British left 78 years ago, and the region later split into three independent nations – India, Pakistan, and Bangladesh – with significantly expanded and diversified economies.

Since then, Bangladesh's tax administration remained largely rooted in that colonial-era structure.

Now, in a landmark move, the interim government has dismantled that 101-year-old legacy by separating the National Board of Revenue (NBR) into two wings – one for policy and the other for enforcement.

The separation, formalised through an ordinance issued on Monday (12 May) night, aims to modernise tax administration, reduce conflicts of interest, and enhance taxpayer services.

Experts say the separation is expected to empower taxpayers, improve service delivery, and provide a clearer route for redress in cases of harassment by tax officials. By decoupling tax policymaking from enforcement, the reform seeks to eliminate long-standing structural contradictions, they added.

"This reform has been in discussion for years, but political inertia held it back. The interim government has now shown the will to deliver," said Muhammad Abdul Mazid, former chairman of the NBR and a member of the Revenue Reform Commission formed by the interim government.

According to the government, the new Revenue Policy Division will draft tax laws, set rates, and manage international tax treaties. The Revenue Management Division will focus on enforcement, audits, and compliance.

A statement from the Chief Adviser's press wing explained, "By allowing each division to focus on its core issue, the reform will enhance specialisation, reduce conflicts of interest, and improve integrity.

"It will also help expand the tax base, strengthen direct taxation, support development-oriented policies, and boost investor confidence," it added. "Most importantly, those setting tax obligations will no longer be the same as those collecting them – eliminating opportunities for collusion."

Private sector involvement

Under the ordinance, the Revenue Policy Division will be led by a qualified government officer. Posts in this division will require expertise in income tax, VAT, customs, economics, business administration, law, statistics, and auditing.

An advisory committee will support the division, comprising economists, revenue experts, lawyers, auditors, business association representatives, tariff commission members, and officials from relevant ministries. Appellate tribunals currently under the NBR will now fall under the policy division.

The Revenue Management Division will be headed by a senior government official experienced in revenue collection. It will oversee field-level operations, enforcement, and automation.

The NBR was established under a President's Order in 1972. Administratively, it is under the Internal Resources Division (IRD).

With the formation of these two bodies, the existing Internal Resources Division under the finance ministry will be dissolved. Its workforce will be reassigned to the policy division, while existing NBR officials will be moved to the management division.

Business leaders, experts voice doubts

Rizwan Rahman, former president of the Dhaka Chamber of Commerce and Industry, said the business community had long called for a separation of tax policy and enforcement to reduce harassment.

"Now it has happened, but businesses weren't properly consulted," he told The Business Standard.

He also questioned the secrecy surrounding the move: "We don't know what the reform committee recommended. And the fact that this was done overnight has raised suspicion, despite the government's good intentions."

He asked, "Was this based on consensus? Will the next government honour this structure?"

CPD Research Director Towfiqul Islam Khan echoed these concerns: "We've long advocated for this reform, but the way it was carried out – in secret, late at night – creates doubts."

He added, "There's no clarity on how much of the reform committee's advice was considered. Without transparency and stakeholder involvement, implementation may falter."

Cadres fear marginalisation

Some NBR officials believe the ordinance paves the way for administrative cadre dominance over the two divisions. A customs cadre officer told TBS, "This was passed by bypassing the reform commission's advice. It strengthens the admin cadre's control."

Concerns have also grown over the government's failure to publish the revenue reform commission's report, unlike those of other reform committees.

Officials from NBR's customs and income tax cadres on Tuesday (13 May) announced a pen-down strike in protest. They have also demanded the publication of the full report from the revenue reform commission.

Commission member Md Aminur Rahman told TBS that their recommendation was for both divisions to be led by officers with NBR backgrounds, particularly in the enforcement wing.

"Revenue administration is highly technical. Without specialised knowledge, it's difficult to run effectively," he said. "But that advice doesn't seem reflected in the final structure."

Muslim Chowdhury, former comptroller and auditor general, added, "Under the Rules of Business, only an agency – not a division – can carry out enforcement. But the ordinance mentions divisions, not agencies."

When asked about the dissent, Finance Adviser Salehuddin Ahmed told the media that there was no cause for concern and that the reform would not affect revenue collection or the careers of NBR officials.

Experts urge revision

Experts believe the reform can still be refined. "The opportunity hasn't passed," said Aminur Rahman. "The government can revise it based on feedback from all stakeholders."

Towfiqul Islam Khan echoed the sentiment: "Without broader consensus, durable implementation will be difficult."

NBR Chairman Abdur Rahman Khan at an event on 4 May said that since this would be an ordinance, it will require a lot of preparation for implementation. 

"All parties involved must agree. We have partners, and everyone needs to come to an agreement. It is a time-consuming process," he added.