TDS Desk:

The National Board of Revenue (NBR) may have lost as much as Tk 1.88 trillion in the 2022-23 fiscal year due to widespread exemptions and evasion in the country’s value-added tax system, according to new research.

The findings were presented on Tuesday at a dialogue organised by the Centre for Policy Dialogue (CPD), a private research think tank, at a hotel in Dhaka.

CPD Senior Research Associate Tamim Ahmed said the study sought to determine the effective rate of VAT, which was found to be 11.7 percent.

“With that, we have seen how much our actual VAT collection should be,” he said.

“That means, even after excluding the VAT collection, we can see that there is around Tk 1.88 trillion showing.”

According to the study, the NBR collected Tk 1.32 trillion in VAT during the 2022-23 fiscal year, though the potential collection was Tk 3.2 trillion.

The gap, researchers said, reflected the impact of both evasion and exemptions.

Although the standard VAT rate is set at 15 percent under law, many goods and services are currently exempt.

CPD estimated that the effective VAT rate was 11.73 percent in sectors where VAT is applicable.

For the study, researchers gathered information from 123 companies in Dhaka and Chattogram related to corporate tax, and from 389 business establishments across the country on VAT.

The report also highlighted the concerns of businesses about tax administration.

Seventy-two percent of companies surveyed said corruption among tax officials was the “single major challenge” they faced.

Eighty-two percent said they were subject to an “unfair” tax rate, while 79 percent cited a lack of accountability among NBR officials as a major obstacle.

When an NBR official suggested that it would have been better to analyze 2025 data, CPD Research Director Khondaker Golam Moazzem responded that the organisation had intended to do so.

“But unfortunately, we had to face the irony of asking the NBR for information,” he said.