The National Board of Revenue (BNR), which aims to align itself with international standards, has primarily agreed to move away from the practice of deducting a non-refundable minimum tax at source.

In a meeting with the revenue reform committee yesterday, NBR officials also expressed their full support for the implementation of a sustainable and transparent automation system to reduce corruption, as well as reforming the three existing laws – the Customs Act, the Value Added Tax added the Additional Tax Act, and the Income Tax Act – to meet global standards.

Officials are optimistic that once the reforms are properly completed, both local and foreign investors will gain greater confidence in the system.

Local and international businesses constantly express their concerns about the tax collection system, especially the non-refundable minimum tax requirement, even when they suffer losses.

Mr Farid Uddin, a former member of the NBR and part of the five-member revenue reform committee, told The Business Standard: “Senior officials at the NBR agree that there are distortions in the current tax collection system, particularly in regarding the minimum tax as a final solution, and that they should be eliminated by legislative changes.”

He stated that NBR officials have expressed their support for reforms that would increase revenue collection and minimize irregularities.

“Senior officials of the BNR admit that the current revenue management system is neither fully manual nor automated. If full automation were to be implemented, the harassment of taxpayers would be significantly reduced and revenues would increase,” he added, mentioning that tax officials are willing to support. reform.

A senior NBR official, speaking on the condition of anonymity, told TBS: “Reforms of fiscal policy were discussed. It is true that turnover tax and minimum tax, which are collected as final settlement without adjustment, distort international standards. We agree that these aspects, among others, need to be reviewed.

“We, however, are concerned that the immediate elimination of this system could have a negative impact on revenues, as a significant part of the tax is collected this way. We had to implement this tax system because of weak audits and lack of transparency.”

Farid Uddin agreed with his concern and added, “With proper automation and digitization in revenue management, revenue collection could be doubled from the current levels.”

The caretaker government, led by Professor Muhammad Yunus, formed the revenue reform commission on October 9, headed by former NBR chairman Muhammad Abdul Mazid.

Since Bangladesh’s independence, there have been numerous allegations of harassment and corruption among VAT, Excise and Customs officials, and these complaints are only increasing.

On the other hand, businesses have frequently faced accusations of tax evasion. Despite multiple discussions and initiatives over the past two decades to automate revenue management, implementation has been minimal.

As a result, complaints of harassment and corruption from taxpayers continue, and revenue collection remains below expectations – currently less than 8% of GDP, one of the lowest rates globally.

Bangladesh’s development partners, including the International Monetary Fund and the World Bank, are also pushing for reforms in the revenue sector to increase transparency.

The Foreign Investors Chamber of Commerce and Industry (FICCI), representing global businesses in the country, has long been advocating for the abolition of this tax collection system.

Currently, the NBR collects tax deductions at source at rates between 0.5% and 30% in at least 55 sectors, representing more than 50% of total income tax collection.

In FY24, NBR collected Tk 1,31,102 crore in income and travel taxes, a significant portion of which consists of minimum tax and turnover tax.

FICCI President Zaved Akhter welcomed this initiative, calling it “the right step at the right time”.

Zaved, also managing director of Unilever Bangladesh Limited, one of the country’s largest FMCG companies, added that if Bangladesh adopts this decision, a clear roadmap for implementation would be needed.

“If the minimum tax system is reduced and provides a facility for refunds or adjustments, it would be helpful. Our organization is ready to assist the committee if it requests our input,” he said. “If Bangladesh’s revenue system aligns with international standards, it will build the confidence of global investors.”

The head of the reform commission, Abdul Mazid, declined to comment on the matter, but said: “We will meet with other sectors involved in revenue mobilization, including business, and aim to finalize the report soon.”

Farid Uddin added: “We are working with the aim of completing our work in the next four months.”