The government of Bangladesh has projected to improve the ratio of revenue to GDP to 10.6 percent in the mid-term (by 2024-25 fiscal), even though the revenue sectors are suffering a lot due to the COVID-19 pandemic and Russia-Ukraine War. The ratio of revenue to GDP expresses total government revenue as a percentage of gross domestic product. The vast majority of government revenue comes in the form of tax collection. Consequently it is also sometimes known as the tax-GDP ratio. Other smaller revenue streams include things like bonded warehouses, a customs-controlled warehouse for the retention of imported goods until the duty owed on them is paid. According to an official document, the revenue-GDP ratio for the running 2022-23 fiscal has been estimated at 9.7 percent, rising to 10.4 percent in the 2023-24 fiscal. Read more: IMF suggests updating GDP report every 3 months It said that in preparing fiscal policy, the government has been maintaining an expansionary fiscal stance by keeping the budget deficit at a moderate level. Moreover, the government has taken up many reform initiatives to improve the revenue-GDP ratio which is low compared to the neighbouring countries. Due to the rebasing of GDP to the 2015-16 fiscal, the ratio has dropped even further. Although revenue-GDP ratio has been growing slowly due to high GDP growth, revenue growth has been on a positive trend. The official document of the Finance Ministry said that several reform initiatives have been taken by the government to reinforce domestic resource mobilisation as well as to improve the revenue-GDP ratio. It is envisaged that positive impacts of ongoing and future reforms will ensure significantly higher revenue and hence, total revenue is projected to grow to 10.6 percent of GDP in the fiscal 2024-25. Read more: Bangladesh has one of the lowest debt-to-GDP ratios: Finance Minister tells ADB In south Asia Bangladesh has the lowest tax-GDP ratio. A 2016 World Bank report said that the South Asian tax -GDP ratio is 19.1 percent in Nepal, 16 percent in Bhutan, 12 percent in India, 9.9 percent in Afghanistan, 9.1 percent in the Maldive while in Bangladesh it is 8.8 percent. In 2017 Bangladesh's position in tax-GDP ratio slid to 7.6. According to available data from World Economic Outlook of October 2019 issue, the revenue GDP ratio of the country is 9.9 percent on average since 2015-2019 while it is 19.8 percent for India, 23.9 for Nepal, 14.7 for Pakistan, 13.5 for Sri Lanka, 25.6 for developing countries and 35.9 for developed countries. Due to COVID-19, the revenue collection declined while pressure mounted on the budget as the government made high expenditure to face the adverse impact of the economic situation. The Russia-Ukraine war just added to the woes for the revenue collection authorities as the economic conditions across the globe are suffering heavily. Read More: Without reforms, Bangladesh’s GDP could fall below 4% by 2035: World Bank study The document stated that of the 10.6 percent of the revenue GDP ratio in 2024-25 fiscal 9.0 percent will come from National Board of Revenue (NBR), 0.5 percent will be from non-NBR sources while 1.1 percent will be from non-tax sources. The target for the revenue GDP ratio for 2023-24 fiscal has been estimated at 10.4 percent where 8.8 percent will be from National Board of Revenue (NBR), 0.5 percent will be from non-NBR sources while 1.1 percent will be from non-tax sources. In the running 2022-23 fiscal the government is projected to get 8.3 percent from National Board of Revenue (NBR), 0.4 percent from non-NBR sources while 1 percent from non-tax sources. In the previous 2021-22 fiscal, the government had projected to boost the revenue GDP ratio to 11.3 percent with 9.5 percent from National Board of Revenue (NBR), 0.5 percent from non-NBR source while 1.2 percent from non-tax sources. Read More: Bangladesh’s GDP likely to grow by 6.6% in FY 2023: ADB But in the revised estimation, it lowered down the ratio to 9.8 percent where 8.3 percent was from the NBR, 0.4 percent was from non-NBR sources and 1.1 percent from non-tax sources. The COVID-19 pandemic and the Russia-Ukraine war was the main cause of lowering down the ratio. The document said that the government has taken various reform activities to improve the overall revenue collection. It mentioned that an automated system has been introduced for VAT and income tax collection along with bonded warehouses. Read more: Focus on extending tax net to enhance Tax-GDP ratio: ICAB The document hoped that apart from reforms programmes for modernisation of the tax administration, expansion of the tax net, developments in tax compliance and law amendment, and simplification of the tax system in Bangladesh would create significant positive impact on revenue collection in the future.

The Institute of Chartered Accountants of Bangladesh (ICAB) on Saturday in a budget reaction said more initiatives are required to extend the tax net for increasing tax-GDP ratio in the country. The ICAB and the National Board of Revenue (NBR) can work together to verify company documents on income tax return issues which will help the government to achieve the fiscal revenue collection target, ICAB leaders said. The ICAB said this in a press conference for a formal reaction on the proposed budget, held at CA Building at Karwan Bazar in the capital. Also read: Budget: Dr Atiur for reconsidering some tax proposals Md. Shahadat Hossain FCA, president ICAB, Md. Humayun Kabir FCA, ex-president, ICAB, and Shubhasish Bose, CEO of ICAB, spoke at the function. The ICAB thanked Finance Minister AHM Mustafa Kamal for receiving almost all proposals of the institution on supplementary duty, tax and VAT related issues. Reduction of the ratio of source tax and its field, tax reduction for specific companies in special rate are appreciated in the proposed budget. Separate policy and regulation for start-up business will attract the generation to start innovative business, said ICAB. The ICAB leaders also said changing revenue policy for some sectors will encourage export variation, which is needed to increase export volume of Bangladesh. “Input Tax Credit on Business Services Proposal to reduce fines from 100 percent to 50 percent and maximum 100 percent, to perform operations electronically in a bonded warehouse - These topics are up-to-date and business friendly,” said ICAB in the budget reaction. Also read: Budget FY23: Laundered money to be legalized by 7-15 pc tax Md. Shahadat Hossain FCA, president ICAB, Md. Humayun Kabir FCA, ex-president, ICAB, Shubhasish Bose, CEO of ICAB, spoke at the function. NKA Mobin FCA, Sabbir Ahmed FCA, Md, Abdul Kader Joarddar FCA, Snehasish Barua FCA, Mahbub Ahmed Siddique FCA, among others, present in the press conference.

The National Board of Revenue has asked its offices to intensify their drive to attain this fiscal year’s revenue collection target overcoming the Covid-19 pandemic so the tax-GDP ratio improves to double-digit. It also asked customs and taxes appellate tribunals to clear the pending cases in due time. These directives have been given recently at a coordination meeting of the finance ministry’s Internal Resources Division (IRD). Read BGMEA seeks customs, VAT, income tax-related support from NBR Speaking at the meeting NBR chairman and IRD secretary Abu Hena Md. Rahmatul Muneem asked all NBR officials to remain sincere and active to achieve the revenue collection set at Tk 330,078 crore during fiscal 2021-22. He asked the NBR members, customs commissioners and tax commissioners to intensify proper monitoring system. The NBR chairman directed the research and statistics division director general to submit updated revenue collection information in every month’s coordination meeting. Also read: NBR faces uphill task in achieving VAT collection target Of the total target the VAT wing will contribute the lion share with Tk 127,745 crore which is 11 percent higher than the revised target of the last fiscal. Last fiscal the target was Tk 125, 163 crore. The target for Income Tax and Tax on Profit has been set Tk 104, 952 crore where it was Tk 103, 945 in the last fiscal. The revenue collection from import duty will be Tk 37, 907 crore, Tk 54,465 crore from from Supplementary Duty, Tk 56 from export duty, Tk 3825 from Excise Duty while Tk 1050 crore from other taxes and duties. Read NBR to prioritize local industries in 2021-22 budget, says its chairman In the last fiscal (2020-21) the revised revenue target was Tk 301,000 crore while it was set Tk 330,000 in the main budget. But the NBR could not attain the revised target mainly due to the ongoing pandemic that saw the government to impose lockdowns affecting the economy. According to the available data the revenue collection in 2020-21 fiscal was Tk 41,000 crore less than the revised target while Tk 70,000 from the original target. Read NBR looking to procure non-intrusive inspection systems for export-import items The collection was Tk 259,900 crore although the growth was 19 percent.

Speakers at a webinar Tuesday stressed the need for framing a COVID-19 pandemic focused budget for the next fiscal year giving the highest priority to the health sector to mitigate the health-related risks alongside focusing on sound macroeconomic management, widening social safety nets, raising the tax-GDP ratio and generating more employments. They also emphasised strengthening the ongoing vaccination programme, carrying on necessary tax reforms as well as reducing the corporate tax rates, ensuring proper budget implementation and quality spending of development projects, addressing the livelihood issues in the context of pandemic, prioritising the CMSMEs and bringing the education sector under the purview of the stimulus packages. The recommendations came up with at a webinar on ‘Macroeconomy: Expectations from National Budget 2021-22’ jointly organised by the Institute of Chartered Accountants of Bangladesh (ICAB) and the Economic Reporters' Forum (ERF). The Economic Affairs Adviser to Prime Minister Dr Mashiur Rahman agreed with the suggestions to enhance budgetary allocation on the health sector and thus strengthen the ongoing vaccination campaign. Stressing the need for carrying out necessary reforms in the financial sector and in the revenue sector, he said reforms in the capital market and bond market is also necessary to attract the large scale investors. Mashiur noted that if the lion’s share of the deficit financing could be made available from the foreign sources then its impact on the domestic sector would not be that much. He also stressed the need for boosting confidence among the businesses and investors, attracting more FDI, ensuring skills development and sound basic education up to the secondary level. Distinguished Fellow of CPD Prof Dr Mustafizur Rahman emphasised on generating more employments, giving relief to the import substitute industries through taxation, revisiting the import regulations, enhancing quality expenditure, and ensuring necessary reforms. He was also critical about the scope for whitening black money in the budget saying it is an injustice to the honest taxpayers. Executive Director of PRI Dr Ahsan H Mansur proposed allocating Tk 15,000 crore for vaccination in the next budget and that fund should be made available from day one. For the new poor being created from the impacts of the pandemic, he said only cash support is not enough for them, rather some permanent measures should be awarded. The renowned economist also suggested addressing the livelihood issues due to the pandemic, prioritising the SMEs in the stimulus packages, focusing more on expenditure and said the budget deficit could be stretched from 7 to 8 percent. Executive Director of SANEM Dr Selim Raihan called for expanding economic operations and not having an obsessed mindset on growth, rolling out social safety net schemes for the urban poor, boosting business confidence through necessary measures, increasing budget implementation and ensuring some visible reforms. Former adviser to the caretaker government Rasheda K Chowdhury said that the next budget should be a pandemic-focused one while the education sector should be brought under the stimulus package as the losses to this sector is huge and it is invisible. "Education sector must not be less prioritised," she said. Chairman of PEB Dr M Masrur Reaz suggested for bringing around 50 percent of the country's population under the vaccination programme in the next one year, otherwise, the revival initiatives and recovery would be much tougher. He also proposed allocating one percent of GDP as social safety net for the poor as well as awarding another stimulus for the SMEs, especially for the small and micro-entrepreneurs. Senior research fellow of BIDS Dr Nazneen Ahmed strongly advocated for reducing the corporate tax rate, prioritising those development projects which are nearing completion, keeping budgetary allocation on creating health awareness as well as on health disaster management, making cheaper the internet facilities and also making available the gadgets for the poor students. BGMEA President Faruque Hassan urged the government to provide policy support to the affected industries till the crisis ends so that those could make a turnaround. He also demanded the government to keep the tax rates stable for 10 years or at least for five years for turnaround of the Industries. Chairman of Trustee Board of BUILD Abul Kasem Khan suggested for the continuation of the stimulus packages in the next budget as well as rationalizing taxation measures and improving the investment climate. MCCI President Barrister Nihad Kabir put utmost priority on ensuring qualitative spending of development projects through real-time basis monitoring and evaluation by the IMED, raising the tax-GDP ratio, giving policy support to CMSMEs, and also to check the trend of dodging tax and laundering of money abroad. DCCI President Rizwan Rahman suggested reducing the corporate tax rate progressively by 2.5 percent in the next three years and thus brings it at 25 percent to facilitate the businesses. Coming down heavily on the scope for whitening undisclosed money, he said that the business community would not accept such provision for whitening the money coming from 'burglary'. "Otherwise, the honest businesses will not feel encouraged to pay tax from the next year," he added. BASIS President Syed Almas Kabir suggested keeping the digital transaction out of the purview of VAT for the next 3 to 5 years to facilitate online transaction and wider materialisation of the 'Digital Bangladesh' initiative. ICAB President Mahmudul Hasan Khusru said the tax net is not widening that is why honest and existing taxpayers are overburdened with incremental tax recovery target. “While we would be graduating as developing country, our preferential benefits would be eroded, we’ve to compete with other developing countries. Hence, human resource development is paramount important, capacity building of our institutions and adoption of advanced technologies and professional education are also important to emphasise in the budgetary allocation,” he added. FICCI President Rupali Haque Chowdhury, former President of AmCham AKM Aftabul Islam, chief news editor of the Daily Prothom Alo Shawkat Hossain Masum, ICAB vice presidents Sidhartha Barua, Md Abdul Kader Joaddar and council member of ICAB Mohammad Forkan Uddin spoke at the webinar. Former ICAB president Md Humayun Kabir moderated the function while its CEO Shubhashish Bose spoke. ERF President Sharmin Rinvy made the opening remarks while its general secretary SM Rashidul Islam gave the vote of thanks and ICAB Vice President Maria Howlader gave the closing remarks.

Prime Minister's Private Industry and Investment Adviser Salman Fazlur Rahman on Saturday said the government is working on policy reforms, aiming to attract more foreign direct investment (FDI).

The government has opted to clamp down on the Value Added Tax (VAT), specially from the 40 lakh small and medium enterprises, for increasing its revenue collection in the coming days.