NBR Drafting Stricter Tax Exemption Policy

NBR Chairman Md Abdur Rahman Khan announced that the authority to grant tax exemptions will no longer rest with the NBR but will be transferred to Parliament. He emphasized that this shift is part of efforts to make the policy more stringent. "The government and NBR will not provide tax exemptions; only Parliament will have the authority," he stated during a pre-budget meeting with the Retired Tax Officers’ Welfare Association at the Revenue Building.

Khan clarified that only exemptions in the interest of the republic would be considered, signaling a crackdown on misuse. According to NBR data, individual taxpayers have received over Tk 40,000 crore in tax exemptions—more than double the amount granted to companies.

The International Monetary Fund (IMF) has advised Bangladesh to streamline tax exemptions as part of a broader effort to improve tax expenditure, which is included in the country's $4.7 billion loan agreement. The IMF has also recommended a 0.5% annual increase in the tax-to-GDP ratio through FY26.

The government acknowledges the misuse of tax exemptions, noting that some individuals—particularly black money holders—are exploiting these benefits to pay reduced taxes, often through questionable income declarations. The exemptions are intended to support social welfare, promote local industries, and incentivize investment in backward areas and economic zones. However, complaints have surfaced that some industries are exploiting these provisions through unethical means.

Currently, 102 sectors receive partial or full tax exemptions, with 40 of them benefiting individual taxpayers and the rest allocated to companies and industries. The NBR has warned that these widespread exemptions are costing significant revenue, and no impact assessment has been conducted on their effectiveness.

Khan pointed out a study indicating that the value of tax exemptions conceded by the NBR is roughly equal to the revenue it collects. As part of its ongoing reform efforts, the NBR is focused on rationalizing tax policies and improving operational efficiency.

He also highlighted concerns over the high rate of zero tax return submissions, noting that nearly two-thirds of income tax returns are unreported. Khan stressed the need for better enforcement, urging field officials to issue notices to taxpayers who fail to submit proper returns.