NBR chairman vows to expand tax base, review tax expenditures

National Board of Revenue (NBR) Chairman Abu Hena Md Rahmatul Muneem said on Sunday that it is not easy to raise the tax-to-GDP ratio overnight, given the country's poor tax base.

Muneem, who is also senior secretary of the Internal Resources Division (IRD), said it is a challenge, but the tax authority should not give up.

"We have to decide where the government will focus on collecting revenue and where not," he said at a workshop on Medium and Long-term Revenue Strategy (MLTRS) on indirect tax, supported by the World Bank and the European Union.

The workshop, organised by Bangladesh Customs at a city hotel, brought together stakeholders from think tanks, businesses and chambers.

Md Masud Sadiq, member of customs policy and IT, moderated an open consultation with stakeholders. Zakia Sultana, member of VAT policy wing, delivered opening remarks.

Commissioner of Customs, Excise and VAT Syed Mushfequr Rahman gave a presentation on 'Context and Strategic Objectives of the MLTRS'. He is the team leader of the MLTRS drafting committee.

Lamenting the existing high volume of tax expenditures, the revenue board chairman said taxes are blamed for any rise in commodity prices.

"We have to sacrifice revenue following demands to rein in prices of essentials for the sake of consumers by cutting taxes. But there is no discussion on the price hike of many products, not having taxes on them," he added.

If the NBR frequently faces such pressure to cut taxes, it will be really difficult to achieve tax GDP targets of 12.3 per cent by 2025 from the existing 8.0 per cent, he added.

The NBR has been incurring revenue loss by giving tax exemptions or on account of tax expenditures blindly, as there is no study on this yet, he added.

"It's not that we want to discontinue all tax exemptions, but a review of the facility is required to check illogical tax breaks," he said.

He also laid emphasis on taxing the digital economy properly, finding effective strategies as the sector remains untapped. "Marginal level of businesses involved in the digital platform have to pay taxes. Otherwise, revenue collection would remain confined to a few sectors."

On MLTRS, the NBR chairman said it would not be wise to take any emotional steps that do not exist in the law.

VAT policy wing Member Zakia Sultana said the MLTRS report would be finalised with the approval of the finance minister by March 2024.

In the keynote presentation, Commissioner of Customs, Excise and VAT Syed Mushfequr Rahman explained the expected outcomes, challenges, road map and other vital aspects of the strategy.

He said the customs contribution to delays in good delivery from ports is only 7.0 per cent, while other departments are responsible for the rest.

In the presentation, Mr Rahman said indirect taxes are regressive in nature, so emphasis should be given to increasing direct tax collection.

Bangladesh Knitwear Exporters and Manufacturers Association (BKMEA) Executive President Mohammad Hatem said businesses have been shouldering heavy tax liability as they are not allowed to adjust the advance taxes paid at import stages.

Shomi Kaiser, vice president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said integration between businesses and the regulatory body is important to address the problems faced by stakeholders.

Dr Zaidi Sattar, chairman of the Policy Research Institute (PRI), said some 90 per cent of supplementary duty (SD) has been imposed as a protective tariff, creating anti-export bias.

Ferdous Ara Begum, chief executive officer (CEO) of the Business Initiative Leading Development (BUILD), said addressing the age-old tax treaties should be prioritised to prepare the country for LDC graduation.

Dr Ahsan H Mansur, executive director of PRI, said multiple tax rates have been increasing the tax liability of businesses, affecting the growth of small and medium ventures.

Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said foreigners often ask about changes in fiscal policies as they prefer a constant measure for investment.

He recommended framing fiscal measures for at least five years, without changes.

Enamul Hafiz Latifee, joint secretary (research fellow) of the Bangladesh Association of Software and Information Services (BASIS), said the digitalisation move should be AI-based to help businesses adopt digital technology.

Responding to the allegations, Chattogram Custom House (CCH) Commissioner Mohammad Fyzur Rahman said customs rarely hold up goods long in the port for testing unless there is specific instruction in the import policy to scrutinise.

He said the CCH is open to talking and discussing different specific problems in the port.

Md Tariq Hassan, additional commissioner of Chattogram Custom House, explained the implementation structure of the strategies and vowed to enhance stakeholders' participation.

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