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The International Monetary Fund (IMF) has set a revised target for Bangladesh to increase its tax-GDP ratio by 0.6-percentage points for the current fiscal year.
This increase equates to an additional Tk 930 billion in revenue.
Currently, Bangladesh's tax-GDP ratio stands at 7.9 per cent, one of the lowest in the region. Under the government's commitment to the IMF, the tax-GDP ratio is expected to increase by 0.5 percentage points each fiscal year.
The adjustment in the target occurred during a meeting held at the National Board of Revenue (NBR) premises, following the NBR's failure to meet last year's target.
NBR officials said they have to submit a plan within the next three days detailing how the tax-GDP ratio will be increased by 0.6 percentage points.
Previously set at 0.5 percentage points, the target was increased by 0.1 percentage points due to last year's shortfall.
According to a senior tax official, revenue collection totalled Tk 3.69 trillion last year, achieving an additional 0.4 percentage points of tax-GDP ratio.
A tax official said that achieving the new target may prove challenging given the current economic conditions.
Sources present at the meeting noted that the IMF emphasized commitments made by Finance adviser and the Finance division secretary during the last IMF-World Bank annual meeting regarding the tax-GDP target.
However, the NBR chairman was absent to address the difficulties at the IMF-WB meeting to explain taxmen's difficulties.
The IMF inquired about it's previous conditions against credit support to the government.
The queries include reducing tax expenditure, implementing a unified VAT rate of 15 per cent across all sectors, and enhancing revenue collection from capital gains tax in the stock market.
The IMF has set several objectives, including the introduction of online tax returns for corporate taxpayers by June 2026, finalization of a mid- to long-term revenue strategy (MLTRS) for direct and indirect taxes by March 2025, and the separation of the policy and implementation functions of the NBR by December 2025.
For the current fiscal year, the revenue target for the NBR has been set at Tk 4.80 trillion. However, as of October 2024, the NBR has experienced a negative growth trajectory of 1.0 per cent.