Tax-GDP ratio expected to reach 10% in 5 years: PM

Prime Minister Tarique Rahman on Wednesday said Bangladesh is expected to raise its tax-to-GDP ratio to 10% within the next five years through a series of reforms aimed at expanding the tax base, improving compliance and strengthening revenue administration.

He also said the government has set a long-term target of increasing the ratio to 15% by 2035.

The Prime Minister disclosed the plans in a written reply to a question from Munshiganj-1 lawmaker Md Abdullah during the ninth sitting of the second budget session of the 13th Jatiya Sangsad.

Responding to the question, Tarique Rahman said the government has already adopted a Medium and Long-Term Revenue Strategy (MLTRS) through the National Board of Revenue (NBR) to boost domestic revenue mobilisation and improve the country's tax-GDP ratio.

He said an end-to-end digitalisation programme has been launched in revenue administration, while online tax deduction at source is being expanded. The government is also working to reduce unnecessary tax exemptions and concessions, simplify tax laws and strengthen compliance mechanisms.

According to the Prime Minister, authorities are analysing information collected from various institutions to identify tax risks, while risk-based audits and investigations are being intensified using sector-specific benchmarks. Efforts are also underway to enrich the taxpayer database and bring more eligible individuals and businesses under the tax net.

He said AI-based online services have been introduced to facilitate taxpayers, alongside awareness programmes to encourage voluntary tax compliance. Effective legal action is also being taken against tax evasion.

Outlining short and long-term measures, the Prime Minister said the government is formulating and implementing the Tax Expenditure Policy and Management Framework 2026 to gradually reduce tax expenditures and improve revenue collection.

He added that revenue recovery efforts are being strengthened through post-clearance audits, settlement of pending cases and arrears, auctions, encashment of bank guarantees, recovery from unresolved consignments and deferred payment mechanisms.

The government will also gradually implement the National Tariff Policy 2023 and the Customs Strategic Plan 2024-2028 to modernise customs administration and enhance revenue performance, he said.

"With the implementation of these initiatives, we expect the tax-to-GDP ratio to rise to 10% within the next five years," the Prime Minister said.

He further noted that projects such as the Strengthening Domestic Revenue Mobilisation Project and the gradual rationalisation of tax exemptions will support the government's goal of increasing the tax-to-GDP ratio to 15% by 2035.

TZ