NBR bifurcation unlikely under interim govt

A smooth sailing of the revenue board-bifurcation ordinance may be hindered by multiple challenges and seems difficult to come into effect in the interim government's tenure.

Experts and economists feel the need for legal clarity, cautious moves to frame rules of business, organogram, and terms of references for smooth transition of the National Board of Revenue (NBR) into two departments after 53 years of its run.

The much-desired separation of functions of the NBR needs detailed and clarified rules of business, organogram and support from the tax, VAT and customs officials.

The process of implementation of the amended ordinance would need time to do the groundwork to avert any blow to revenue mobilisation, former tax officials say.

The original ordinance was issued on May 12, 2025. The government formed a five-member advisory committee, headed by Energy and Road Transport adviser Dr Foujul Kabir Khan, to amend the ordinance following flare up of protests at the NBR on provisions allowing other cadres to lead its policy wing.

Economist Dr Masrur Reaz finds the six months of the interim government too short to complete the groundwork on NBR bifurcation.

"National election is scheduled for February next as per announcement of the interim government. I find it an uphill task to complete the bifurcation process," says Dr Reaz, the founding chairman of Policy Exchange Bangladesh.

Earlier, the Finance Adviser had hinted about completing the NBR-separation process by December next.

Farid Uddin, member of the NBR advisory committee on reform and former member of the NBR, says the separation must have to be well-coordinated to make the international best practices successful in Bangladesh.

"There is no denying on separation for the betterment of country's domestic revenue mobilisation," he told the FE writer.

Two divisions must not develop dominating approach to each other to avoid any dispute between policy and implementation wings, Mr Farid added.

He alerts the ordinance may backfire and affect revenue mobilisation if the government does not move cautiously.

Already, tax-to-GDP ratio slipped to 6.6 per cent, from 7.4 per cent, in the last financial year due to multiple disruptions to domestic revenue mobilisation, including shutdown in tax, vat and customs offices in protest against the bifurcation ordinance, issued on May 12, 2025.

Another member of the advisory committee, Delwar Hossain, a former NBR member, says legal complexities may arise after dissolving the NBR as numerous government laws, rules, provisions have quoted 'NBR' in their legal frameworks.

"Anyone can file writ petition challenging an order issued by the newly framed departments," he adds, suggesting that the government address those issues carefully.

He also suggests that the government should consider appointment of NBR officials as policy-department chief as formulation of tax law needs field-level experiences too.

Dr Abdul Mazid, former Chairman of the NBR, also member of the 'NBR advisory committee, says the government may need to address some points to implement the ordinance.

The advisory committee has submitted its interim report on bifurcation and another comprehensive report on NBR reform would be prepared with stakeholder opinions, he adds.

A senior official of the NBR thinks legal complexities may not appear in other laws as the ordinance has incorporated a saving clause that mentions the word "NBR' would have to be considered 'Revenue Management and Revenue Policy" departments in other laws.

Customs, income tax and VAT law would be changed during the budget of the next financial year, he points out.

As per the revenue-reform ordinance, NBR officials would be able to lead the Revenue Management wing, but revenue policy wing has been made open to government officials having expertise on macro-economy, trade policy, planning, and revenue policy or revenue-management issues.

"Revenue policy department would have officials having experiences on income-tax policy, double taxation-avoidance treaty, international treaties and vetting, customs policy, VAT policy, international trade and customs-related agreements," it reads.

Other posts of the revenue policy wing are kept for officials having experiences in research and statistics, accounting and audit, ICT and law.

NBR officials fear the dominance of the administration-cadre officials in revenue administration and policy after the ordinance comes into effect.

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