The National Board of Revenue (NBR) has initiated a plan to digitize its tax audit selection process, replacing the long-standing manual method, to eliminate human interference and restore taxpayer confidence. The move comes in response to ongoing complaints from taxpayers who claim the existing manual system exposes them to unnecessary harassment. NBR Chairman Md Abdur Rahman Khan confirmed the development: “We have begun working on digitizing the selection process to ensure it is objective and transparent.” He acknowledged NBR's "image crisis" concerning how tax audit files are selected. "Taxpayers often complain that the manual selection process is subjective, and this has damaged trust in the system," he said. "Our goal is to eliminate any confusion by fully automating the audit selection process, free from human intervention." In line with the NBR's ongoing transition to a digital system, the authority has temporarily suspended the selection of new tax files for audits. Following the formation of the interim government, NBR's member of taxes (tax audit, intelligence and investigation), Md Alamgir Hossain, issued a directive instructing all field-level tax offices to halt new audit selections until further notice. The decision aims to address the complexities faced by both taxpayers and tax officials under the existing manual process. NBR to focus on out-of-court settlement of tax disputes to boost revenue Bangladesh continues to grapple with one of the lowest tax-to-GDP ratios in the South Asian region—just 7.3%. In contrast, neighboring countries like India (12%), Nepal (17.5%), and Bhutan (12.3%) have significantly higher ratios. Moreover, only 5.2% of Bangladesh's population are registered as taxpayers, a stark contrast to India’s 23.08%. Currently, 67% of the government’s revenue comes from indirect taxes. The NBR has acknowledged the need to shift this dependency toward direct taxes. The NBR chairman has said they are working to broaden the tax net in a way that is more convenient for taxpayers, encouraging compliance while reducing the burden of indirect taxation. The implementation of the Income Tax Act 2023 has introduced new audit guidelines that have raised concerns about potential increased bureaucracy and costs for taxpayers. Under the guidelines, taxpayers may face multiple stages of interrogation, which some fear could open the door to underhand dealings. To combat these concerns, the NBR has been developing specialized software, known as the "Risk Management Engine," which is designed to bring greater transparency to the tax audit process. The software will link with other government agencies to gather data and select tax files for audit based on risk factors, helping to detect tax evasion more effectively. Read more: How to file your Tax Returns in Bangladesh