Enhancing tax return compliance

Although Bangladesh has over one crore Taxpayer Identification Numbers (TINs) holders, nearly 59 per cent of these individuals did not file tax returns in the fiscal year 2023-24. This gap highlights a critical issue in our tax system, as the number of tax return submissions is not keeping pace with the country's economic growth and the number of registered taxpayers.
Several factors contribute to this shortfall. Many taxpayers avoid filing returns due to the complexity of the process and fears of potential harassment by tax officials. Furthermore, a significant number of TIN holders are inactive or use their TINs solely for specific services, such as land transfers or migration purposes. The presence of inactive companies further compounds this issue.
To address these challenges and increase tax return submissions, the authorities should consider implementing a robust digital tax filing system. It can significantly reduce the complexity and hassle of submitting returns. The National Board of Revenue (NBR) should prioritise the automation of tax audits and other processes to minimise direct contact between taxpayers and officials, thereby reducing opportunities for corruption and harassment.
Besides, there is a pressing need to educate the public about the importance of tax compliance and the benefits of contributing to the nation's development. The NBR, in collaboration with civil society and media, should launch awareness campaigns to inform taxpayers about their responsibilities and the ease of filing returns through digital platforms.
Introducing incentives for timely and accurate tax return submissions could encourage more people to comply. This could include tax credits, rebates, or recognition programs for compliant taxpayers. Additionally, simplifying the tax filing process, especially for small businesses and individuals with limited income, can also encourage compliance.
The NBR should enhance its monitoring and enforcement mechanisms to ensure compliance. Regular taxpayer surveys and audits, coupled with penalties for non-compliance, can act as deterrents. Additionally, the NBR should update its database to remove inactive TINs and companies, ensuring that the focus remains on active and potential taxpayers.
Overall, developing a culture of tax compliance is crucial for Bangladesh's long-term economic growth.

Asif Islam
Student
Jahangirnagar University