NBR
NBR moves to align Bangladesh’s tariff structure with WTO Commitments
In a step towards global trade compliance, the National Board of Revenue (NBR) has undertaken a comprehensive review of Bangladesh's tariff regime, identifying 60 tariff lines where current customs duties and associated charges surpass the bound rates established in the World Trade Organization (WTO) agreements.
As part of its initial measures, customs duties on 6 items have been reduced, signaling Bangladesh's commitment to aligning its trade practices with international standards.
The initiative, detailed in an official document, sets forth a plan to gradually adjust these rates to fall within the WTO-agreed bound tariffs by 2026. Bound tariffs represent the maximum most-favored nation (MFN) tariff rate a country commits to at the WTO, serving as a ceiling that applied tariffs cannot exceed. This regulatory framework ensures that trade policies remain predictable and stable, providing security for traders and investors.
NBR’s three-pronged strategy to boost revenue collection
Countries typically negotiate bound tariffs during their accession to the WTO or through subsequent trade negotiations, setting these rates higher than their applied tariffs to retain policy flexibility. However, exceeding these bound rates without proper adjustments can lead to international disputes and demands for compensation, emphasizing the importance of adherence.
The recalibration effort by Bangladesh reflects a broader trend among WTO members, where developed, developing, and transitioning economies have significantly increased the proportion of imports with bound tariff rates, enhancing global market stability.
Additionally, the government has resolved to eliminate the minimum import price requirement, already removing it from 55 items with a strategic plan to phase it out entirely from the remaining 130 products by 2026. This move aims to simplify the import process and foster a more competitive market environment.
The document outlines a cautious approach to tariff reduction, ensuring that local industries are not adversely affected and that revenue mobilization remains robust.
The NBR's strategy involves a careful balancing act, prioritizing the protection of domestic sectors while advancing the country's export competitiveness.
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This progressive adjustment of customs duties and the abolition of the minimum import price underscore Bangladesh's efforts to integrate more seamlessly into the global trading system, promoting economic growth and development in alignment with WTO commitments.
Govt has no complete list of public services against which it levies fees or charges: Finance Ministry document
The government of Bangladesh has no complete list of public services against which it levies fees or charges.
“There are thousands of public services against which the government levies fees or charges, but there is no complete list of such fees and charges and when those were imposed,” according to an official document of the Finance Ministry.
According the official document titled ‘Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)’ of the Finance Division of the Finance Ministry, the government has partially set up an online database of all non tax revenue (NTR) items with the fees, charges or prices and their dates of imposition.
“This partial database has opened scope with the hope of increasing NTR income manifolds from administrative fees,” it said.
On the other hand, the government is not only focusing on enhanced revenue mobilisation from NTR by raising fees or charges, but also putting its best effort to ensure efficient and satisfactory service delivery.
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The government has taken numerous initiatives to make service delivery systems paperless and to minimise human deployment in this system. This is one of the key features to building Smart Bangladesh by 2041, the document said.
The government has multiplied public investment during the last one and a half decade, of which the SOEs/Autonomous Bodies (ABs) have enjoyed capital support either in the form of loans or equities.
Loans are registered under government accounts through Subsidiary Loan Agreements (SLAs) and thereby interest is charged.
“However, there is no consolidated database for equity investments of the government and therefore there is no precise estimate for dividend income,” the official document said.
The government has taken the initiative to create an exhaustive database for equity investments in the SOEs/ABs as well as establish a Financial Reporting Council for setting standard financial statements to ensure proper assessment of these organisations.
According to the ‘Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)’, With the economic advancement of the country the scope and volumes of public services have evolved and expanded.
Read more NBR’s three-pronged strategy to boost revenue collection
Government organisations are engaged in delivering various new services in new forms to the public.
The government has taken initiatives to explore such novel and voluminous services against which fees/charges may be collected through organising stakeholders’ consultation workshops, seminars, etc.
As per the Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26) of the Finance Division, some Tk 5343 billion will come from tax revenue sector in the 2024-25 fiscal year and Tk 6463 billion in 2025-26 fiscal year.
In the next two fiscal years, the National Board of Revenue (NBR) will provide Tk 5095 billion and Tk 6171 billion.
From the Income Tax wing, the collection will be Tk 1753 billion for the next fiscal while Tk 2123 billion for 2025-26 fiscal, and the collection from import duties will be Tk 1511 billion and Tk 1830 billion respectively.
From the VAT and supplementary Duties, the revenue collection will be Tk 1831 billion and Tk 2218 billion respectively.
The non-NBR tax for the 2024-25 fiscal and 2025-26 fiscal will be Tk 248 billion and Tk 292 billion respectively with non-tax revenue collection will be Tk 529 billion and Tk 634 billion respectively.
The target for running 2023-24 fiscal is Tk 5000 billion with Tk 4500 billion from tax revenue. Of the total amount, Tk 4300 billion will come from NBR through Tk 1480 billion from income tax, Tk 1275 billion from import duties, Tk 1545 billion from VAT and supplementary duties. Some Tk 200 billion will be collected from the non-NBR sector while Tk 500 billion from the non-tax revenue sector.
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NBR’s three-pronged strategy to boost revenue collection
Aiming to significantly boost revenue collection from domestic sources, the National Board of Revenue (NBR) is adopting a three-pronged approach.
These are: digital transformation, expansion of tax net, and enhancing administrative capacity.
The core idea is to make tax payments easy and transparent to improve taxpayer services which in turn will help NBR to collect more revenue, according to an official document.
According to the Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26) of the Finance Division of Finance Ministry, the government has taken some Major reform measures to materialise the move.
The VAT & Supplementary Duty Act 2012 has been implemented in July 2019. With the implementation of the new act, the collection of VAT and supplementary duty is expected to receive a significant boost in the medium term. After the initial hiccup and the shortfall due to the outbreak of COVID-19, revenue collection accelerated in FY22.
The government has enacted the new Customs Act, which replaced the Customs Act 1969. International best practices in customs, including that of the World Customs Organization (WCO), the revised KYOTO Convention and the WTO Trade Facilitation Agreement have been incorporated here.
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The law aims to harmonise and simplify customs processes to facilitate the collection of custom duties.
The new Income Tax Act is also expected to create an enabling environment for taxpayers, streamline income tax assessment and collection, and facilitate domestic and foreign investment.
To implement the new VAT law, the NBR undertook the ‘VAT Online Project (VoP)’ which was in operation since 2013 and concluded in June 2021.
Under the VOP, the official document said that the three important automation measures have been completed. First, the Online VAT Registration began in March 2017. Again, the central registration system has been in force since July 2019. The NBR has introduced online return submission in July 2019. The digital filing system has been introduced in the form of online submission of VAT returns.
The NBR has rolled out the electronic payment (e-payment) of customs duties in 2017, income tax in 2012 and VAT in 2020. Income tax can be paid through MFS (mobile financial services) as well.
To facilitate real-time deposit of government money to the national exchequer, the government has launched the Automated Invoice Portal. This Automated Challan (also known as A-Challan) will act as the receipt window of the government. The payment of income tax has already been brought under the A-Challan system on a pilot basis.
The NBR now plans to expand its use for payment of VAT and customs duties. The A-Challan will ensure the timely deposit of money including the prevention of fake return submission and revenue evasion.Moreover, the discrepancy between the amount of revenue collected by the NBR and the accounts given by the Accounting Offices will be eliminated.
The Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26) said that individual taxpayers can now submit their tax returns online.
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The NBR has successfully launched eTDS Environment for easy and hassle-free processing of income tax at the source. With the introduction of this system, taxpayers’ time, cost and visits have been reduced to almost zero. Taxpayers can now submit fourteen reports in the eTDS environment.
To stop evasion in VAT and enhance VAT collection, the government has introduced Electronic Fiscal Devices (EFD) with a sales data controller mechanism.
The government has already installed 9270 EFD/SDC (Sales Data Controller) machines. NBR has selected 24 sectors, including residential hotels, bakeries and fast foods, decorators and caterers, sweet shops etc. for this purpose.
To broaden the coverage, the government has decided to outsource the installation of EFD/ SDC machines with a target of 60,000 EFD/ SDC in the first phase and 3,00,000 in five years, if the first phase brings good results.
Besides, to prevent tax evasion and to bring transparency in VAT record keeping, the government has made the use of NBR-prescribed VAT software mandatory in VAT-registered industries with annual turnovers of Tk 5 crore or above.
The NBR has made provisions to enable internet-based companies, such as Google, Facebook, Microsoft etc. to pay their VAT on online sales.
This allows these companies to pay their VAT through their authorised VAT agents without opening their office in Bangladesh.
The NBR plans to operationalise the risk management system to ensure that no more than 10 percent of the import consignments are subject to physical examination. To that end, the NBR has established a Central Risk Management Unit/Commissionerate for Customs.
To streamline the bonded warehousing system, reduce its misuse and make it transparent, the government has taken a project that aims to automate the bond management system by June 2023. Meanwhile, the licensing module has started operation and other modules will become operational soon.
Bangladesh Customs will soon be conducting a Time Release Study in the major custom houses to take stock of the actual time taken in the release of imported consignments. The objective of the TRS will be to identify bottlenecks in customs clearance and to take measures to reduce clearance time.
The NBR strives to expand the number of taxpayers and has made the return submission mandatory for all TIN-holders with a few exceptions.
Other reform efforts by the NBR included – i) implementation and activation of Online National Single Window, Post Clearance Audit, Advance Ruling, Authorised Economic Operator, and thereby increasing dynamism in international trade; ii) full implementation of online income tax return submission under SGMP project; iii) implementation of “Individual Source Tax Deduction Monitoring Zone” to strengthen income tax deduction monitoring; iv) expansion of the e-Payment system in income tax; v) activation of transfer pricing and anti-money laundering activities; and vi) strengthening ICT infrastructure construction and automation activities.
Administrative expansion of the income tax department is underway, the Medium Term Macroeconomic Policy Statement added.
Introduction of the Document Verification System (DVS) has brought financial discipline and positively contributed to boosting tax collection both in income tax and VAT by increasing transparency.
NBR collects nearly Tk 2 lakh crore in 7 months, growth over 15%
Ambitious targets: Govt aims to collect Tk 5872 billion and Tk 7097 billion revenue in FY 2024-25, FY 2025-26
The government of Bangladesh has set ambitious revenue collection targets for the fiscal years 2024-25 and 2025-26, aiming to gather Tk 5872 billion and Tk 7097 billion, respectively. The strategy hinges on enhancing digitalization and simplifying tax procedures for both businesses and individuals.
The focus will be on direct taxes and VAT to raise more revenue. In addition to expanding the tax net and increasing the capacity of tax officials, exercises will be carried out to rationalise the current culture of widespread tax exemptions and to bring in heightened transparency in the budgetary discourse.
As per the Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26) of the Finance Division of Finance Ministry, some Tk 5343 billion will come from the tax revenue sector in 2024-25 fiscal and Tk 6463 billion in 2025-26.
In the next two fiscal years, the National Board of Revenue (NBR) will provide Tk 5095 billion and Tk 6171 billion.
From the Income Tax wing, the projected collection will be Tk 1753 billion for the next fiscal, and Tk 2123 billion for 2025-26 fiscal. Collection from the import duties will be Tk 1511 billion and Tk 1830 billion respectively.
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From VAT and Supplementary Duties, the revenue collection will be Tk 1831 billion and Tk 2218 billion respectively.
The non-NBR tax for 2024-25 and 2025-26 will be Tk 248 billion and Tk 292 billion respectively. Non-tax revenue collection will be Tk 529 billion and Tk 634 billion respectively.
The target for the running 2023-24 fiscal is Tk 5000 billion with Tk 4500 billion from tax revenue. Of the total amount, Tk 4300 billion will come from NBR through Tk 1480 billion from income tax, Tk 1275 billion from import duties, Tk 1545 billion from VAT and Supplementary duties. Some Tk 200 billion will be collected from the non-NBR sector while Tk 500 billion from non-tax revenue sector.
According to the Medium Term Macroeconomic Policy Statement, revenue outturns estimated for 2023-24 and projection for the next two years show high elasticity and buoyancy, implying robustness in revenue mobilisation in the medium term.
It mentions that among the tax and non-tax parts of the revenue, the tax revenue is forecasted to be more buoyant and elastic than the non-tax part.
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The elasticity data shows that the overall revenue is projected to grow 1.65 times higher than the nominal GDP in FY 2025-26.
As per the statement, the revenue elasticity of GDP for the 2023-24 fiscal is 1.28 times higher than the last fiscal while it is projected to be 1.40 times higher in the next 2024-25 fiscal year.
The tax revenue elasticity of GDP will be 1.33 times higher in the current fiscal while it will be 1.50 times higher in the next fiscal and 1.66 times higher in 2025-26 fiscal year.
The non-tax revenue elasticity of GDP for the running fiscal will be 0.92 times higher in the current fiscal, 0.47 times higher in the next fiscal year, and 1.57 times higher in 2025-26 fiscal year.
On the other hand, the buoyancy indicates that, in FY 2025-26 the tax revenue in real terms may grow 98 percent higher than the growth of real GDP.
The Policy Statement mentions that the revenue mobilisation acts as a catalyst to achieve the development outcomes of a country. Bangladesh has envisioned its long-term development trajectory to be a higher middle-income country in 2031 and to be a developed country in 2041.
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In addition to these aspirations, the ‘Perspective Plan of Bangladesh 2021-2041’ has targeted to raise the revenue- GDP ratio to 19.55 percent by 2031 and to reach 24 percent by 2041.
The statement says that the spectacular growth Bangladesh registered in the last decades, however, has not been underpinned by concomitant revenue growth. A large share of the revenue comes from the direct (income tax) and indirect taxes (VAT and customs) collected by the National Board of Revenue (NBR). Non-NBR taxes and Non-Tax Revenue (NTR) consists of smaller parts.
It said that there is a need to identify the reasons for low revenue collection to move onto the essential next step to correct the course. It is important to understand various issues such as the economic structure (large informality and exemptions), structural weaknesses (complicated processes and information asymmetry), and cultural factors (apathy towards paying taxes) that contribute to significant underperformance in revenue collection.
The government, the policy statement said, with the support of private sector operators, is keen to make paying taxes easy, tax rules easy to understand and rationalise tax exemptions.
Success in revenue collection will be strengthened by making the tax administration easy to approach, increasing digitalization to bring in transparency and predictability and bringing in progressivity in taxation where rich people pay a higher part of the taxes, it added.
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Bangladesh Economic Association proposes 70 percent tax on cigarettes, tobacco
The Bangladesh Economic Association (BEA) has proposed a 70 percent tax on all types of cigarettes and tobacco in the next budget.
The association reckons that doing so will reduce smoking by about 66 percent, alongside generating revenue of Tk1,700 crore for state coffers.
The proposal was submitted to the National Board of Revenue (NBR) during the pre-budget discussion held at the NBR Building on Sunday (February 18).
The General Secretary of the BEA Professor Dr. Md. Aynul Islam presented the budget proposal. Vice President of the association Professor Hannana Begum was present.
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According to the BEA's proposal, imposing a single supplementary duty of 70 percent on all types of cigarettes would increase the price of cigarettes by an average of 130 percent.
Smoking will be reduced by 66 percent. About 70 lakh smokers will quit smoking, and about 71 lakh young people will stop habituating to smoking. Also, the additional tax revenue of the government will be earned at least Tk1700 crores, the proposal stated.
Similarly, the BEA demanded to impose a tax of 70 percent on all types of tobacco products including smokeless tobacco such as jorda, gul, sadapata, etc.
On the other hand, in the case of bidi, if the tax is imposed at the rate of Tk 4.90 on the retail price of every 25 shalak (piece) packet, the government will be able to collect additional revenue of Tk 800 crore.
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The BEA thinks with such a tax increase; revenue earning will be raised and it would help to revive the economy from the ongoing economic crisis. The BEA has a total of 27 new sources of revenue income.
At this time, Prof Aynul said, as a method of gathering resources for the upcoming budget, no pressure can be applied on the general population, such as the poor, lower class, lower middle class, and middle class.
Due to various reasons, this class of people is now in a severe economic crisis. It would be unfair at this moment to rely completely on them as in the past for tax collection.
In that case, the imposition of additional income tax on these three groups – the super-rich, the rich, and the upper-middle class – can be considered, said Prof Aynul.
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ICMAB delegation takes part in pre-budget discussion with NBR
A delegation of the Institute of Cost and Management Accountants of Bangladesh (ICMAB) headed by its President Professor Dr. Md Salim Uddin FCMA took part in a pre-budget discussion for the fiscal year 2024-25.
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The programme was held at the conference hall of National Board of Revenue (NBR), Agargaon, Sher-e-Bangla Nagar, Dhaka on Sunday.
The NBR Chairman and Senior Secretary Abu Hena Md. Rahmatul Muneem listened to the budget proposal of INMAB and exchanged views with the ICMAB delegation.
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Prof Salim presented an overview of suggestions that have an intense probability of increasing revenue income by imposing taxes on untouched fields on the revenue collection side. Whereas, Past President and Council Member of ICMAB Md. Abdur Rahman Khan FCMA presented it in detail.
Among others, Treasurer Abdul Matin Patwary FCMA, Council Member Dr. Syed Abdulla Al Mamun FCMA, and Fellow Member HM Mainuddin Ahammed FCMA were present in the meeting from ICMAB.
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Academicians and researchers from different institutions like ICAB, ICSB, and Bangladesh VAT Forum were present there, said a press release.
ABB leaders congratulate NBR Chairman on reappointment
A delegation of the Association of Bankers Bangladesh Limited (ABB) led by its Chairman, Selim R. F. Hussain, has made a courtesy call on the Chairman of the National Board of Revenue and Senior Secretary, Internal Resources Division Abu Hena Md. Rahmatul Muneem.
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ABB leaders congratulated him on his reappointment.
ABB Secretary General and Managing Director & CEO of Prime Bank PLC Hassan O. Rashid attended the meeting on Tuesday.
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ABB leaders also discussed the tax regime in the banking sector with him and shared ABB's recommendations.
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Govt cut VAT, duty on import of 4 essential items ahead of Ramadan
The government has reduced VAT and duty on import of rice, edible oil, sugar, and dates ahead of holy month of Ramadan.
The National Board of Revenue (NBR) issued four gazette notifications reducing the customs duties on these essential items from a minimum of 5 percent to a maximum of 47 percent.
According to the notifications, rice import duty and tax have been reduced by 47.25 percent. The duty has been reduced from 62.50 percent to 15.25 percent. Out of this, supplementary duty has been cut by 20 percent.
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This tax reduction will be applicablein the import of boiled and non-boiled rice.
However, prior to importing rice at subsidized rates, written approval must be taken from an official of minimum joint secretary rank of the Ministry of Food for each shipment. The tax reduction facility will be valid till May 15, 2024.
On the other hand, the Value Added Tax on refined and crude (non-refined) soybean and palm oil has been reduced to 10 percent from 15 percent, which will be in force till April 15.
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For sugar import, the fixed duty has been reduced from Tk 1,500 to Tk 1,000 per metric ton. This facility will be valid till March 31 as per NBR notification.
Besides, the import duty on date has been reduced from 58 percent to 43 percent.. It will remain in force till March 30.
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In the cabinet meeting held at the Prime Minister's office on January 29, Prime Minister Sheikh Hasina ordered reduction of duty on edible oil, sugar, dates, and rice on the occasion of Ramadan.
On January 22, the Ministry of Commerce wrote to National Board of Revenue (NBR) to exempt tax on rice, edible oil, sugar, and dates.
NBR recognises BAT Bangladesh as top taxpayer
BAT Bangladesh has been recognised as the top taxpayer for the 2022-2023 fiscal year by the Large Taxpayers Unit (LTU) of the National Board of Revenue (NBR).
The company, contributing an amount of Tk 1,352 crore as Corporate Tax to the national exchequer, received recognition for being the highest taxpayer for the fiscal year 2022-23,said a press release.
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On Wednesday, the LTU organised a ceremony at the NBR office, Agargaon, where the chief guest was Syed Mohammad Abu Daud, Member - Tax Administration and Human Resource Management, NBR. The function was presided over by Md. Iqbal Bahar, Tax Commissioner, LTU, Dhaka.
BAT Bangladesh’s Company Secretary - Mr Azizur Rahman FCS, Area Head of Corporate Finance - Nashva Bint Hamid and Assistant Manager, Fiscal Affairs - Baizid Haque Joarder received the accolade on behalf of the company.
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After receiving the recognition as the top taxpayer, Md. Azizur Rahman said, “BAT Bangladesh fully complies with the laws and regulations of the Country, maintains complete transparency and pays taxes on time. In order to build a Smart Bangladesh, we strongly believe we can play a pivotal role as a significant partner in the country's development in the coming years."
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BAT Bangladesh contributed approximately Tk 31,507 crore in the forms of Value Added Tax (VAT), Supplementary duty (SD), Corporate Tax, Import Duty and other duties during the said fiscal year.
FBCCI urges NBR to extend tax return submission deadline till Dec 31
The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), the apex organization of businessmen, has requested the National Board of Revenue (NBR) to extend the deadline for submission of income tax returns.
The federation in a letter to the NBR Chairman said that due to the late publication of income tax circulars in line with the new Income Tax Act 2023, the businessmen are not prepared to submit returns.
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So, the deadline for filing returns need be extended until December 31 this year.
The letter said due to the current political situation and upcoming parliamentary elections, many taxpayers may be able to file income tax returns by November 30.
Some other business chambers have also requested the NBR to extend the tax return submission deadline.
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The Dhaka Taxes Bar Association has demanded an extension of the return submission deadline by another two months.