Experts call for full digital overhaul of NBR to ensure fiscal stability, sustainable growth

Expert opinions for NBR's overhaul

• Digitalisation key to expanding tax base, reducing corruption
• Introduce 'expenditure tax' to track luxury spending
• Separate tax policy-making from implementation
• Rebrand TIN as Social Security Number
• Shift to smart tax systems
• Introduce single, low tax rate and process simplification

Bangladesh is on the brink of a financial crisis unless the National Board of Revenue (NBR) undergoes a strategic and comprehensive digital transformation, experts warned at a seminar held in Dhaka today.

The roundtable, titled "Journey from Analog to Digital: The Rationale, Country Practices, and Digitalizing National Board of Revenue for Economic Growth of Bangladesh", was organised by Emerging Credit Rating Ltd (ECRL) at its head office.

The event brought together prominent economists, academics, and industry leaders to discuss the urgent need to reform the country's tax administration and improve revenue collection.

In his keynote speech, Dr Jamaluddin Ahmed, chairman of ECRL, outlined a detailed roadmap for overhauling the NBR's infrastructure. 

He argued that shifting from analog systems to digital infrastructure is not just a technical necessity but a national imperative to tackle tax evasion, improve transparency, and align with Bangladesh's 2041 development vision.

Dr Waresul Karim, dean of the School of Business and Economics at North South University, painted a sobering picture of the country's financial situation, pointing to the nation's critically low tax-to-GDP ratio and a massive, ballooning national debt.

"Bangladesh is on the brink of an imminent financial collapse," he warned, noting that citizens cannot demand Western-style social services without a corresponding commitment to paying taxes. 

He urged the NBR to prioritise tackling large-scale tax evasion and proposed creative solutions like an "expenditure tax" to track luxury spending. 

Dr Syed Mortuza Asif Ehsan, associate professor and head of Department of Economics at NSU, said digitalisation is a game-changer for Bangladesh's economy, crucial for improving its extremely low tax-to-GDP ratio and enhancing transparency by reducing corruption and rent-seeking. 

He emphasised that while digitalisation can significantly expand the tax base and improve revenue sustainability, it must be accompanied by institutional reforms, particularly separating policy-making from implementation within the tax administration, to ensure its long-term success.

Dr Ziaul Haq Adnan, associate professor and head of Department of Management at NSU, highlighted the need for process simplification. He advocated for a single, low tax rate to encourage horizontal expansion of the tax net. 

He also emphasised the importance of utilising locally developed solutions to ensure data security and suggested rebranding the TIN as a Social Security Number to foster public trust.

The roundtable concluded with a consensus that digitalisation is not just a technical upgrade but a political and social imperative requiring strong leadership, legislative changes, and a shift in the national mindset to ensure fiscal stability and sustainable growth.

The paper presented also outlined a five-part framework for reform, exploring international tax modernisation trends. 

The framework highlighted the global shift to smart tax systems, with 141 countries adopting VAT and technologies such as AI, blockchain, and IoT transforming tax operations. It also pointed towards readiness models that evaluate a country's preparedness for digital tax reform.

The paper also stressed on international case studies – reviewing successful examples from Korea, Singapore, Australia, and India to show the benefits of digital identity and e-filing systems. It also noted that Bangladesh, with just 13% e-filing, is falling behind.

It also explored technological solutions from firms like Huawei and Baiwang, focusing on platforms like eRA, iRisk, and Smart Tax Brain.

The paper further proposed a strategic roadmap built around five pillars – people, process, content, technology, and focus.