Bangladesh’s tax-GDP ratio lowest in Asia-Pacific region: OECD

Business Report :

Bangladesh ranks lowest among 37 nations in the Asia-Pacific region for the tax-to-GDP (Gross Domestic Product) ratio, mostly due to the inability to capitalize on the potential arising from consistent economic development and insufficient reform.

According to the latest report by the Organization for Economic Co-operation and Development (OECD), Country’s tax-GDP ratio of 7.3 percent in 2023, almost one-fifth of the Pacific Island nation Niue, which had a tax-GDP ratio of 35.3 percent.

Bangladesh’s revenue collection was also far below the regional average of 19.6 percent of GDP across the region as a whole, shows the report titled Revenue Statistics in Asia and the Pacific 2025.

It states that tax revenues increased on average across the Asia-Pacific region for the third consecutive year in 2023, driven by higher VAT receipts.

As per the OECD report, Bangladesh, along with 23 other countries in the region, is heavily dependent on value-added tax (VAT) and import tariffs for its tax revenue.

In 2023, the country collected most of its revenue – 4.7 percent of its GDP – from goods and services, namely through VAT and import tariffs, it states.

In terms of direct taxes, the country’s income tax collection amounted to only 2.5 percent of the GDP, well below the average of 7.4 percent of GDP in Asia-Pacific, the report also states.

In total, 34 percent of the revenue collected by the country in 2023 came from income taxes, while the rest came from taxes on goods and services.

The OECD report noted that Bangladesh, like many other developing economies, struggles to improve the quality of revenue officials.

“Developing economies in Asia and the Pacific struggle to raise the quality of their tax administration staff, in part because it is difficult for governments to pay competitive salaries, but also because of rigidities in civil service systems and reluctance to reform. “

“Bangladesh is a case in point, even if it is not unique in the region for this problem,” the OECD report states.