Tax avoidance, evasion causes Tk 292,500cr revenue loss per year: CPD

Staff Reporter :
The government is losing Tk 55,800 to Tk 292,500 crore of potential revenue due to tax avoidance and evasion per year, according to a study of the Centre for Policy Dialogue (CPD).
The independent think-tank revealed the study at a media briefing on “Tax Transparency in the Corporate Sector: Impact on Public Revenue of the National Budget” organized jointly by the CPD and the Christian Aid at CPD’s office in the city on Monday.
The amount of tax evasion is estimated to be eight times of social safety net and welfare expenditure and the amount of tax avoidance is 200 percent of the public
health expenditure of Bangladesh, the CPD added.
It also said that this is happening in multiple ways such as showing less income, unethical support from tax practitioners, showing more investment allowances, individuals showing lower income, and high informal transactions or cash-based transactions.
Speaking at the briefing, CPD Research Director Khondaker Golam Moazzem said, “It is important to take measures against different types of tax avoidance and evasions that are currently taking place.”
He also said that the government could increase tax-to GDP (gross domestic product) ratio to a significant level by taking appropriate measures against tax evasion and tax avoidance.
Suggesting Bangladesh work intensively to widen the tax net and bring businesses that are out of the tax net, he said, “Tax exemption should be time bound and target oriented. All transactions and reports in financial sectors should be integrated.”
“Apart from this, transactions should be digitized and internet based and the firms need to move towards mandatory sustainable reporting to ensure tax transparency,” Moazzem added.
He further said, “Bangladesh has the highest corporate tax rate in South Asia. But the tax GDP ratio is the lowest, even after Afghanistan. Personal and sales tax is not less, but we are not being able to enjoy its benefits.”
Bangladesh has the highest gap between tax-GDP ratio and tax rate in South Asia due to the failure of taking advantage, he added.
The study also said, “Some 68 per cent of people do not pay tax, despite having taxable income, which means, a major portion of people are remaining out of tax net. It is a headache in case of tax-GDP ratio.”
On the other hand, only 45,000 companies filed returns, despite the number registered firms with Joint Stock around 213,000, it said.
Blaming the informal sector a big barrier for widening tax net, Moazzem said, “The size of the informal sector in the country is 30 per cent. The amount of tax in the informal sector was Tk 22,000 crore in 2010, which increased to Tk 84,000 crore in 2021. It means Tk 84,000 crore tax loss in shadow economy.”
Pointing out that the trend of tax evasion and concealment of financial information to avoid taxes has increased, the CPD research director said that Bangladesh ranks 52nd among 141 countries in the tendency of concealment of financial information to avoid tax evasion and tax in the global index.