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The recent bifurcation of the National Board of Revenue (NBR) into two separate entities under the Ministry of Finance has come as a surprise, despite tentative moves taken previously in this direction. The newly established Revenue Policy Division and Revenue Management Division will now split responsibilities that were so long handled by a single organisation. The Policy Division will focus on drafting tax laws and setting tax rates, while the Management Division will be tasked with enforcement, audits and compliance. This structural reform is intended to enhance transparency and eliminate potential conflict of interests by separating those who design tax policies from those responsible for implementing them. Such a bifurcation is widely seen as a measure to curb irregularities and reduce opportunities for collusion between policymakers and enforcers. The ordinance that enacted this change also dissolved the Internal Resources Division (IRD), in line with long-standing recommendations from international development institutions and economic experts. The goal is to streamline revenue administration and increase Bangladesh's tax-to-GDP ratio, which remains one of the lowest in Asia at approximately 7.4 per cent. In contrast, the average ratio in advanced economies is 16.6 per cent, and over 10 per cent in many developing countries. To meet its development goals, Bangladesh must raise this figure to at least 10 per cent.
A statement from the Chief Adviser's Press Wing emphasised that this move is not merely an administrative reshuffle, but a vital reform to build a fairer and more efficient tax system. Separating tax policy from administration is expected to broaden the tax base, reduce inefficiencies, and enhance the credibility of tax governance. The restructuring is aimed at ending a long-standing conflict of interests, where the same authority was responsible for both framing tax policy and enforcing it. Critics have long argued that the unified structure of the NBR compromised the quality of tax policy, favouring short-term revenue gains over fairness and long-term economic planning. Businesses, in particular, have voiced frustration with tax measures that prioritised revenue collection over consistency and growth.
The call for structural reform is not new. The International Monetary Fund (IMF) first recommended the separation of the NBR's policy and administrative functions as early as 1993, with the World Bank reinforcing the suggestion in 2007. Over the years, economists, think tanks, and international development partners have echoed these views, urging the government to modernise the revenue system for greater effectiveness and transparency.
Despite opposition from within the NBR -- where officials have reportedly initiated a pen-down protest -- the wider expert community, including business leaders and economists, largely supports the change. The task forces and committees formed by the interim government have also advocated for this bifurcation. While the restructuring marks a significant step forward, its success will ultimately depend on how well the transition is managed. Ensuring adequate resources, capacity building, and a clear division of responsibilities between the two new entities will be essential for this reform to deliver its intended outcomes.