The National Board of Revenue (NBR) has set a six-month target to significantly broaden its tax base, aiming to reduce the disproportionate burden on the country's existing taxpayers.
 
"We have fixed a target of six months to widen the tax net, focusing on increasing the number of taxpayers. This will be our priority," a senior NBR official told UNB over the phone.
 
The official emphasized that while a substantial portion of revenue is currently generated from a relatively small pool of existing taxpayers, a large number of eligible individuals and businesses remain outside the tax net.
 
"We have initiated a drive to bring these untapped taxpayers into the system," he added.
 
Currently, 67% of Bangladesh's revenue comes from indirect taxes, such as customs duties and Value Added Tax (VAT), with the remaining 33% from direct taxes, primarily income tax. The country's tax-to-GDP ratio is just 7.3%, trailing behind neighboring countries like India (12%), Nepal (17.5%), Bhutan (12.3%), and Pakistan (7.5%).
 
"We must expand the tax net; otherwise, existing taxpayers will feel discouraged from continuing to pay taxes," the NBR official said.
 
This initiative follows a directive from Finance and Commerce Adviser Dr. Salehuddin Ahmed, who, during a visit to the NBR on August 27, urged the board to take decisive steps to improve the tax-to-GDP ratio. "We cannot progress by continually relying on loans from others," Dr. Salehuddin said.
 
An official document highlights a recent collaboration between the NBR and the Bangladesh Road Transport Authority (BRTA), which has enabled system integration for data exchange, accuracy verification, and detection of tax delinquencies. This partnership has been instrumental in identifying new taxpayers and recovering arrears.
 
The document also notes advancements in modernizing and automating the tax payment process. The introduction of the e-TDS system for monitoring tax deduction and collection at the source, along with an e-Return system for filing, has simplified the process for taxpayers. As a result, the number of e-TIN registered taxpayers has surpassed one crore, with the NBR receiving 41 lakh tax returns by April of the last fiscal year-an increase of 27% compared to the same period in FY 2023-24.
 
Policy measures, including the requirement of proof of submission of return (PSR) for accessing various government services, have been pivotal in driving the growth of tax returns.
 
"We must raise taxpayer awareness and utilize our resources effectively. Our priority is to identify the reasons behind the significant number of unregistered taxpayers," another senior NBR official told UNB.
 
Income tax plays a crucial role in the country's economy, contributing to social and economic equality by redistributing income. Direct taxes, which are generally progressive, aim to ensure that higher-income individuals pay a larger share of their income in taxes compared to lower-income individuals.
 
Currently, income tax accounts for about 33% of the total revenue collected by the NBR, with an average growth rate of over 16% in income tax collection.
 
The document further outlines efforts to increase the contribution of direct taxes to 42% by 2031 and 50% by 2041 through the implementation of taxpayer, business, and investment-friendly policies.