A government-constituted expert panel has recommended introducing inheritance tax as part of broader efforts to widen Bangladesh's tax base and uplift the tax-to-GDP ratio to 15-20 per cent by 2035.
The proposal is incorporated in the National Taskforce for Tax Reform report submitted to the Chief Adviser of the interim government and to the National Board of Revenue (NBR), which outlines a comprehensive restructuring of the country's cumbersome taxing system.
The full report, however, has not yet been made public.
Unveiling key elements of the report Thursday, Dr Zaidi Sattar, Chairman of the Policy Research Institute (PRI) and head of the taskforce, said Bangladesh's tax system is highly complex and distortionary, encouraging non-compliance, trade barriers and asset undervaluation.
"We have proposed reforms to make the tax system transparent and trade-neutral, particularly by reducing high trade tax," Dr Sattar said at a press briefing at the PRI office in Dhaka.
The taskforce for tax reform has proposed reduction in trade tax to 7.5 per cent by 2035 from the current 28 per cent in a bid to facilitate trade and help export diversification, Dr Sattar said.
About introduction of inheritance tax, accounting professional Snehasis Barua, a taskforce member, said the proposed tax is aimed at addressing the undervaluation of assets and ensuring a fair contribution from accumulated wealth.
He said the current tax structure largely overlooks wealth transfers, limiting revenue mobilisation.
Alongside inheritance tax, the taskforce has proposed reforms to the property-taxation system, including shifting from outdated valuation methods to current market-based assessments.
Property-transaction taxes such as city corporation tax, stamp duty, Rajuk fee could be reduced to six to seven per cent from 13 to 14 per cent, he said, quoting taskforce recommendation.
The taskforce also proposes increasing capital-gain tax on transfer of property to 20 per cent for corporate taxpayers from current 15 per cent, he said.
This move is expected to improve fiscal accuracy and curb tax evasion linked to asset undervaluation, the taskforce members said at the briefing.
To strengthen compliance, the report also recommends creating a digital and integrated database by linking city records, land registrations, and tax information. Such integration would help track rental income, professional earnings, and wealth transfers more effectively, the taskforce believes.
Mr Barua added that the taskforce has suggested keeping the highest personal income-tax rate at 25 per cent, restructuring tax slabs in line with inflation, and developing a presumptive database to bring informal economic activities under the tax net.
The inheritance-tax proposal, along with higher capital-gains tax for corporations and reduced transaction taxes, is expected to play a key role in modernising the tax system and improving revenue collection, the taskforce members said.
To strengthen enforcement, the taskforce has recommended developing a digitally integrated database linking city-corporation records, land registries, and tax data to track rental income, professional earnings, and inherited assets.
Dr Ahmad Ahsan, PRI Director, said Bangladesh would not be able to join global trade blocs such as ASEAN or sign FTA with such a high trade tax.
The ASEAN average trade tax is 6.0 to 7.0 per cent and China's 7.0 to 8.0 per cent, he cited as examples to underpin their suggestions.
The main focus of the taskforce report is restructuring tax policy that is highly complex now to ensure transparency.
Bangladesh has numerous multiple rates of taxes, which is not commensurate with the World Trade Organisation (WTO) principle, the taskforce members said.
Another taskforce member, Dr Zahid Hussain, Chairman Bangladesh Krishi Bank, said the government must try single rate of tax to simplify tax structure.
Mehedy Hassan, also a member of the panel and an accounting professional, said Bangladesh must join BEPS (Base Erosion and Profit Shifting) community of OECD to get its share of corporate taxes paid by multinationals in their member-countries.
He also aired concern over no visible progress on implementation of Transfer Pricing law.
On Direct taxation, Snehasis Barua said the government would have to focus on a big jump on Personal Income Tax (PIT) collection as per target set in the report.
Introduction of interoperability, unified tax registration is the key to netting informal economy to increase tax collection, he said.
The taskforce report recommends developing presumptive database, keeping highest tax rate for individual taxpayers up to 25 per cent and restructuring existing tax slab adjusting with inflation, Mr Snehasis said.
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