Revenue collection faces record shortfall in FY25 as Petrobangla arrears mount

The National Board of Revenue (NBR) is heading towards a record tax shortfall of around Tk 1.0 trillion in the outgoing fiscal year (FY 2024-25), despite efforts to recover long-standing arrears from state-owned enterprises like Petrobangla.

Until 29 June, the NBR had collected Tk 3.61 trillion in tax revenue against its revised target of Tk 4.63 trillion, falling significantly short of expectations.

Officials fear that the final tally may barely reach Tk 3.70 trillion, compounding the revenue authority's ongoing struggle amid economic disruptions and internal administrative setbacks.

The revenue collection figure remains nearly unchanged from last year, when the NBR managed Tk 3.61 trillion from domestic sources, according to finance ministry documents.

Despite this stagnation, the government has set an ambitious tax collection target of Tk 4.99 trillion for FY25, which would require an extraordinary 35 per cent growth if actual collection caps at Tk 3.70 trillion this year.

Speaking to The Financial Express, NBR Chairman Abdur Rahman Khan confirmed that as of the morning of 29 June, Tk 3.61 trillion had been mobilised.

"We are trying to realise long-stuck arrears from different entities. Today, around Tk 7.50 billion was recovered from Petrobangla," he said, noting that the state-owned energy conglomerate still owes nearly Tk 70 billion in unpaid taxes.

Initially, the NBR had hoped to collect at least Tk 3.80 trillion this fiscal year, even in the face of economic headwinds.

However, officials now acknowledge that this figure may not be achieved due to several disruptions. They remain hopeful that collections could increase slightly by mid-July following book adjustments of outstanding government bills. As of May 2025, the NBR had mobilised Tk 3.27 trillion in revenue, facing a shortfall of Tk 666 billion against the revised target for that period.

Growth remained sluggish at just 6.0 per cent up to May, a marked decline compared to the over 10 per cent growth recorded in the first nine months of the fiscal year.

Among the NBR's three major wings, the Value-Added Tax (VAT) department recorded the highest growth at 8.78 per cent, collecting Tk 1.27 trillion-though it still fell short of the target by Tk 180.35 billion.

The income tax wing posted 6.66 per cent growth with Tk 1.07 trillion collected, missing its target by Tk 322.28 billion.

The customs department lagged furthest behind, registering just 1.71 per cent growth and a shortfall of Tk 164.14 billion against a target of Tk 1.09 trillion.

NBR insiders cite several contributing factors for the dismal performance, including a bureaucratic stalemate since May 14 over the bifurcation ordinance, weak private-sector investment, sluggish development project execution, and volatility in the banking sector.

An analysis by The Financial Express estimates that the final revenue growth for the year may settle at just 2.49 per cent compared to FY24's collection of Tk 3.61 trillion, falling far short of the growth needed to close the gap between target and actual mobilisation.

Historically, the NBR collects an average of around Tk 300 billion per month in domestic taxes. In FY24, the total shortfall stood at Tk 490 billion, following a gap of Tk 380 billion in FY23, based on finance ministry documents.

Officials warn that meeting the International Monetary Fund's (IMF) requirements, particularly the goal of boosting tax-to-GDP ratio, will remain a serious challenge unless the government urgently reforms the NBR and digitises its tax collection infrastructure.

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