The National Board of Revenue (NBR) should reduce tax deduction at source (TDS) following global practices and need to modernise and simplify the country's tax system.
The regulator should offer incentives for Bangladeshi producers and focus on thrust sectors like leather, jute and garment fashion design to create a country brand in the international market.
Experts said this at an online conference on direct and indirect tax organised by the Institute of Chartered Accountants of Bangladesh (ICAB) on Saturday.
Also read: NBR moves to speed up revenue collection
Tax rate changes have a significant impact on investment decisions as investors prepare a budget and plan accordingly based on it, they said.
Pointing to the tax on foreign nationals working in Bangladesh, the experts suggested introducing provisions like withdrawals of tax and customs benefits, cash incentives, cancellations of branches permission for unauthorised employment.
Planning Minister MA Mannan said, "Considering the cost related to tax collection, it is better to chase the evasion of tax by big taxpayers than chasing marginal taxpayers."
Also read: It's time to change the mindset on taxpaying: Salman F Rahman
ICAB President Mahmudul Hasan Khusru said, "An improved tax system is the key to financing public services, reducing inequality, and making the government more accountable. Unfortunately, our tax rate is higher compared to the ones of similar economies including the neighbouring countries."
"Our tax to GDP ratio is exceptionally low. This indicates that there must be some incompatibilities," he added
Bangladesh is still a low tax effort country with a high buoyancy ratio, implying that the policy-makers of Bangladesh have the scope and potential to opt for greater revenue mobilisation through internal resources to meet the budgetary deficit, Mahmudul said.
Also read: NBR sets its sight on cranking up tax-GDP ratio
"However, the tax system in Bangladesh is gradually improving, raising more revenue and reducing the dependency on aid."