The amount in tax evasion by the taxpayers reached approximately Tk聽226,236 crore in 2023, according to a study by the Centre for Policy Dialogue.
The study also said that, of the total tax evasion, about 50 per cent corresponds to corporate tax evasion. The estimated corporate tax evasion in 2023 would amount roughly to Tk聽113,118 crore.
The CPD shared it in a study titled 鈥楥orporate Income Tax Reform for Graduating Bangladesh: The Justice Perspective鈥�, which was unveiled at a press conference organised jointly by the CPD and Christian Aid Bangladesh in the capital on Monday.
The study revealed that a notable rise in tax evasion began in 2011 and climbed significantly over the year, reaching Tk聽96,503 crore in 2012 and more than doubling to Tk聽133,673 crore by 2015.
CPD surveyed 103 listed companies as the final sample of the study.
Regarding the Corporate Income Tax, the CPD urged the government to reform the structure and fix the CIT at not lower than 15 per cent, aligning with the global minimum tax commitment under the OECD/G20 Inclusive Framework while preserving Bangladesh鈥檚 competitive advantage.
In the upcoming FY聽2025鈥�26 budget, they also urged the government to raise the current corporate income tax rate for export-oriented industries, including the ready-made garments (RMG) sector, from 12 per cent to 15 per cent.
Currently, the readymade garment sector enjoys 12 per cent corporate tax on general factories and 10 per cent corporate tax on green factories.
CPD research director Khandker Golam Moazzem said that the country鈥簊 graduation from the LDC will bring some new challenges.
He also said that multinational companies鈥� investments will increase after graduation from LDC, which will increase the risk of tax evasion and tax avoidance.
To address this challenge, the CPD has recommended increasing institutional capacity, developing the tax system鈥簊 digital infrastructure, and implementing policy reforms.
Golam Moazzem also said that the incentives or tax exemptions cannot be the basis of investment.
He alleged that Bangladesh鈥檚 incentive structure is completely based on political considerations and that the country should be freed from it.
He said that, apart from tax evasion, the government loses a huge amount of revenue every year due to incentives and tax breaks.
High revenue is necessary to implement any government plan, and the government should emphasise increasing internal revenue collection.
He also said that the government should reform the tax and VAT sector, as 60 per cent of revenue comes from there.
CPD senior research associate Tamim Ahmed presented the keynote on the study.
According to the study, 82聽聽per cent聽of surveyed businesses believe that the current tax rates imposed on them are unfair, identifying this as one of their significant challenges.
Moreover, 45聽聽per cent聽of the surveyed companies stated that they were asked for a bribe by tax officials (in FY 23), indicating a lack of transparency and corruption within the tax administration.
Besides, 40 per cent of the respondents reported facing problems while adjusting their tax refunds, indicating inefficiencies and delays in the refund process.
Furthermore, 65 per cent of businesses reported persistent disputes with tax officials regarding calculating their payable tax amounts.
CPD recommended reforming the current flat reduced corporate tax rate for all listed companies on the basis on performance, or conditional incentives.
CPD also urged the government to minimise the tax in the next budget.
Golam Moazzem said that digitising the tax sector is important, though NBR and businesses are reluctant.
The CPD identified several key factors behind Bangladesh鈥檚 persistent tax evasion problem, including high tax rates, weak enforcement, complex legal frameworks, and widespread corruption within the tax system.
The CPD said in their report that, from a tax justice perspective, high tax evasion discourages honest taxpayers and increases the burden on those who follow the law.
Christian Aid Country director Nuzhat Jabin said that most low-income countries are dependent on direct taxes, which should change.
As Bangladesh is set to graduate from LDCs, it needs to reduce the dependence on direct taxes, she added.