Staff Reporter :
Tax evasion in Bangladesh soared to an estimated Tk 226,236 crore in 2023, according to a study released yesterday by the Centre for Policy Dialogue (CPD). The findings indicate a sharp upward trend, with tax evasion climbing from Tk 96,503 crore in 2012 to Tk 133,673 crore by 2015 – nearly doubling over an eight-year period.
The study, titled “Corporate Income Tax Reform for Graduating Bangladesh: The Justice Perspective”, was unveiled at a press briefing at the CPD office in Dhaka on Monday. Based on a December 2024 survey of 123 listed and unlisted companies in Dhaka and Chattogram, the research sheds light on the growing scale of tax evasion and the systemic inefficiencies enabling it.
According to the report, high tax rates, complex regulations, weak enforcement, and pervasive corruption are among the primary drivers of tax evasion. Alarmingly, around 45 percent of surveyed firms reported being asked for bribes by tax officials during FY23.
CPD noted that some officials of the National Board of Revenue (NBR) actively discourage businesses from using digital platforms for tax submissions, as such systems reduce opportunities for evasion and limit avenues for bribery.
The study also highlighted inefficiencies in the tax refund process, with 40 percent of businesses reporting difficulties in adjusting refunds. On average, companies spend 34.2 days preparing tax-related documents, incurring an additional cost of 5.27 percent of total tax payments on compliance. Resolving tax disputes takes an average of 93.2 days, with cases ranging from as short as three days to as long as 600.
Dr Khondaker Golam Moazzem, CPD’s Research Director, stated, “Due to tax evasion and sector-specific incentives, the government is losing significant revenue each year. Many of these exemptions, given under the pretext of encouraging investment, are politically motivated and should be abolished.”
He emphasised that tax incentives should not form the foundation of investment policy. “This is a major challenge for Bangladesh as it graduates from the LDC category. We expect multinational investment to rise post-graduation, which may also elevate risks of tax avoidance and evasion,” he added.
The keynote presentation was delivered by Tamim Ahmed, Senior Research Associate at CPD, who reiterated that Bangladesh’s low tax-to-GDP ratio – 8.50 percent in FY24 – is among the lowest in South Asia, excluding Afghanistan. He warned that as concessional finance diminishes in the post-LDC era, the country will need to mobilise domestic resources more effectively.
To address systemic corruption, the CPD recommended installing CCTV cameras in all NBR tax officials’ offices. However, it stressed that strict data security protocols must be enforced, with access limited to authorised personnel only.
Additional recommendations included strengthening institutional capacity, enhancing the digital infrastructure of the tax system, implementing policy reforms, and establishing independent oversight mechanisms to ensure fair and accountable enforcement.
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