2 years ago

Bangladesh's tax revenue up as economy rebounds

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Tax-revenue collection in Bangladesh marks an upturn amid economic rebound, both globally and locally, following reopening from corona lockdowns.

Transitional period in economy after the anti-Covid lockdowns has helped the tax authority hammer in a 14.55-per cent growth in the first two months of the current fiscal year (FY), provisional data with the National Board of Revenue (NBR) show.

The revenue growth was negative 1.50 per cent in the same period last fiscal year-the period when the mortal global pandemic had upended normal order of life and business.

However, the NBR counted a shortfall against its target worth Tk 52.12 billion for the past July-August period.

The taxmen collected Tk 345.48 billion in tax revenue in the first two months against its target for Tk 397.59 billion.

Collection of import and export duties registered the highest growth at 15.72 per cent while VAT collection from domestic sources grew 14.21 per cent.

Income-tax wing of the revenue board registered 13.66-per cent growth in this period.

A senior NBR official said import growth contributed to the higher revenue collection.

"At-source or withholding tax collection is the major contributor to tax revenue. The NBR rationalised the source taxes in the budget to plug revenue leakage," he said.

In the month of July, tax-revenue collection grew 4.06 per cent over the corresponding month last year.

Shortfall in tax-revenue collection was Tk 56.13 billion against the original target for the first month of the fiscal.

Last FY, the NBR achieved above 20-per cent growth in tax collection despite Covid-induced economic slowdown amid lockdown in different phases.

The NBR collected Tk 2.61 trillion in tax revenue in FY 2020-21against the revised target of Tk 3.01 trillion.

The tax growth was twofold in FY '21 against its average growth of 10 per cent during the last five fiscal years.

In FY 2019-20, the NBR had collected Tk 2.18 trillion, registering a negative growth.

For the current FY, the government has set Tk 3.30-trillion target for the NBR.

Talking to the FE, a senior field official said rationalization of source tax and enforcement of budgetary measures helped the revenue authority increase tax receipts.

He said upward trend in import of revenue-generating products, implementation of development projects, rise in consumptions of commodity on the local market, and rise in commodity prices on the international market are contributing to higher revenue collection.

According to Bangladesh Bank (BB) data, the settlement of letters of credit (LC) grew by 30.62 per cent to $5.17 billion in August 2021 from $3.96 billion in the month of July.

The opening of LCs, generally known as import orders, also increased above 48 per cent to $6.29 billion in August from $4.25 billion a month before.

He also said global economic-growth momentum also continues with commodity-price hike that creates inflationary pressure across the world.

Bangladesh Ambassador to Germany, also former chairman of the National Board of Revenue (NBR), Md Mosharraf Hossain Bhuiyan said business activity geared up following the reopening economic activities in the country.

"Installation of Electronic Fiscal Device (EFD) started paying off slightly, helping the government to collect higher VAT," he said.

The NBR, he suggests, should lay more focus on installation of EFD and scanner in all customs ports to check revenue leakage.

"Tax-GDP ratio would not go up unless the tax administration is automated," he says.

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