Experts and economists have raised concerns over the complexities and inefficiencies within the supplementary duty (SD) and excise framework, calling for urgent business-friendly reforms to modernise the tax system and improve domestic resource mobilisation.
Speaking at a workshop on Tuesday, the experts pointed out that the excessive complexity, irrational rate structures and discriminatory treatment of imported and domestic goods are undermining investment, trade expansion, and efficient revenue collection.
Syed Mushfequr Rahman, Member (VAT Audit and Modernisation) of the National Board of Revenue (NBR), was present as the chief guest at the event chaired by PRI Chairman Dr. Zaidi Sattar.
Md. Mashiur Rahaman, First Secretary (VAT Policy) of the NBR, was present as the special guest, while Hafiz Choudhury, Principal, The M Group Inc, delivered insights on keynote paper presented by Dr Bazlul Haque Khondker, Research Director at PRI.
The experts noted that the existing SD structure includes nearly 17,000 benchmark rates, creating distortions that discourage investment and trade, while revenue performance from small and medium-income individuals and enterprises remains weak due to irrational rate determination.
In his remarks, Mushfequr Rahman said that while the government does not want to encourage excessively high tax rates, there needs to be a balance between revenue considerations and growth objectives.
He noted that tax policy formulation faces multiple challenges across various areas, including personal, corporate, and indirect taxes.
Presenting the keynote paper, Dr. Bazlul Haque Khondker said Bangladesh's tax-to-GDP ratio has been on the decline despite growth in per capita income, which is in contrast to other developing and least developed countries.
He noted that around 17 per cent of GDP currently comes from excise duties -- an approach that is outdated by modern standards -- while corporate tax and VAT rates remain relatively high.
He also pointed out that excise duties in Bangladesh are largely price-based, unlike the quantity-based systems used in most countries.
Dr. Zaidi Sattar said, "Conflicting demands in the 2012 tax law resulted in a complex and outdated tax policy introduced in 2019. The National Task Force on Tax Reform has recommended adopting a unified and simplified tax system to address these issues."
He further said that a dual-rate tax structure could be more suitable for Bangladesh's economy -- one lower rate for small and medium enterprises and a standard rate for others.
Currently, a discriminatory excise duty system exists, where imported goods are taxed at higher rates than domestic products, he added.
"While around 1,400 tariff lines are followed in general, excise duties cover nearly 1,700 tariff lines, with about 90 per cent imposing lower rates on local products compared to imports." Dr Sattar said, adding that such disparities contradict World Trade Organisation (WTO) principles and may pose challenges as Bangladesh transitions out of LDC status.
He also emphasised the urgent need for comprehensive tax reform to establish a modern, efficient and equitable revenue system.
Md. Mashiur Rahaman stressed the need for wider stakeholder engagement in tax policy discussions, including institutions such as the World Health Organisation, the Ministry of Health and the Department of Environment.
He also emphasised the importance of a business-friendly tax regime to sustain enterprises that contribute to economic growth.
Hafiz Choudhury raised a critical question about whether the current NBR framework is capable of ensuring fair and rational excise duty assessment.
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