The National Board of Revenue will go ahead with its plans to phase out tax waivers from the upcoming new national budget to bolster the tax-to-GDP ratio, which is now one of the lowest in the world.
It received green signals to implement its roadmap for phasing out tax waivers in the next three years during a meeting with prime minister Sheikh Hasina on Tuesday in the capital.
Officials attending the meeting said that the PM wanted to phase out those tax waivers as they were contributing little to the country鈥檚 economy.
The first budget under the current government would also likely reduce corporate tax by 2.5 per cent, increase supplementary duty on cell phone talk time as well as the tax rate on top-tier taxpayers by five per cent and impose tax on capital gains from the share market,聽 added the officials.
NBR has no plans to increase the lowest income tax ceiling from the current Tk 3 lakh. 聽聽
Officials said that NBR prepared the roadmap and other proposals to comply with conditions from the International Monetary Fund under the $4.7 billion loan programme.
In 2023, the NBR calculated that it had incurred revenue losses of 3.56 per cent of GDP due to tax waivers, which is higher than lower-income countries in South Asia, Sub-Saharan Africa, East Asia, and the Pacific regions.
Currently, tax waivers are given to around 33 industrial sectors.
A study released by NBR in March this year showed that Tk 1.25 lakh crore was lost by the revenue board in FY21 for tax waivers to sectors, with the major ones being power and energy, information technology, garments and textiles, poultry and fisheries, microcredit, economic zones, remittances, and share capital gains.聽
The tax waivers have been regarded as a barrier to the country鈥檚 tax-to-GDP, which fell to 7.6 per cent in the past year, forcing the government to rely on borrowing to meet its growing budget deficit.
The government is borrowing from the IMF to assist the country鈥檚 balance of payments amid shortages of dollars that pulled down forex reserves below $18 billion from $48 billion in August 2021.聽
A recently concluded IMF mission in the capital agreed to provide $1.15 billion as the third tranche of the loan programme soon but stressed the need for tangible measures in the FY25 national budget to augment tax revenues by 0.5 per cent of the GPD.
NBR is going to project the overall collection target at around 4.78 lakh crore in FY25, more than 17 per cent from the original target in the outgoing FY24.
NBR will project a collection target of Tk 1.7 lakh crore for income tax and VAT for the first time.
The new national budget to be announced by finance minister Abul Hassan Mahmood Ali on June 6 is likely to include Tk 1.24 lakh crore from customs duties.
The finance minister joined the day鈥檚 meeting online.
