Completing NBR reform

Splitting the National Board of Revenue (NBR) between its policymaking and revenue management functions has been one of the major reform agendas of the post-July 2024 interim government. The aim was to render the tax regulator more efficient, transparent and accountable. Though the interim administration's term in office is coming to an end soon, the bifurcation is yet to be completed. Notably, the government initially formed a five-member advisory body to guide the reform work. But the work has not progressed smoothly as there were delays as well resistance from the NBR officials after an initial ordinance had been issued in May last year. Two new bodies -- the Revenue Policy Division (RPD) and the Revenue Management Division (RMD) were supposed to emerge under the Ministry of Finance. The function of RPD would be to draft tax laws and deal with treaties, while that of RMD would be to enforce rules and collect tax. Notably, a split in the tax regulator was among the key conditions of the IMF loan advanced to Bangladesh.

But NBR officials started protests and non-cooperation programmes over fears of losing power, career uncertainty and loss of cadre status due to the proposed leadership structure of the new NBR divisions so created. Obviously, their protests including work abstentions and other activities seriously hampered normal work of NBR affecting export and import as well as the revenue administration. Against this backdrop, the government formed another advisory committee, which recommended some amendments to initial ordinance following talks with stakeholders. Meanwhile, disciplinary action was taken against some NBR officials for their disruptive activities.

No doubt, the internal conflict in the NBR has exposed its deeper structural weaknesses. In this context, some experts viewed that political stability and clear policies are the preconditions for restoring confidence in completing the reform work. Meanwhile, the December deadline of finishing the NBR bifurcation has already been missed. Now, to complete the task, some procedural steps are necessary which are obviously time-bound. Those include finalising the Rules of Business (RoB) and Allocation of Business (AoB). Before completion of these functions, it will first require obtaining approval from the NICAR (National Implementation Committee for Administrative Reforms). It is worthwhile to note that pre-NICAR was formed by the interim admin headed by the cabinet secretary in late August this year to provide suggestions for constituting new administrative bodies and approval for manpower. So, after having pre-NICAR's approval, the twin job of splitting up NBR has to get final go-ahead from the NICAR chaired by the CA.

Clearly, this involves a long procedure. For instance, to define the functions of the two split-up NBR bodies which include responsibilities, jurisdictions and operational framework, would require a Statutory Regulatory Order (SRO). These tasks of bifurcation yet to be finalised delay manpower deployment for two NBR departments. In this context, it could be gathered that the revised proposal for restructuring NBR was recently submitted to the cabinet division for approval but was returned with observations. Following corrections as necessary, the drafts of RoB and AoB have reportedly been resubmitted to the cabinet body for approval. Approvals from the pre-NICAR and the NICAR complete the NBR reform process. The question is, can the interim admin finish work within the time it still has in its hands? Some experts have expressed concern over what they termed 'non-transparency of reform process' being conducted by the interim administration. The NBR reform is an issue of transparency and accountability on the part of the interim admin, they added. Let the interim administration address all the concerns expressed and uncertainties created over completion of NBR restructuring and thus finish its NBR reform agenda within its term in office.