Staff Correspondent:

The National Board of Revenue (NBR) wants to reduce all kinds of tax rebates within June 2027 as part of its 10-year strategy, putting the lifting of tax rebates in their “high priority” list.

The agency unveiled the Medium and Long-Term Revenue Strategy (MLTRS) recently.

According to the NBR, tax rebates stand about Tk 2.5 trillion annually. People concerned said if these taxes are not rebated, the government could have spent more on various sectors, including education and health.

NBR sources said tax rebates continue to exist in a few cases after the second quarter of 2027 as per the laws, but there will be no tax rebates through issuing notifications in the long run.

Reducing tax rebate is one of the prerequisites of the International Monetary Fund’s USD 4.7 billion loan disbursement. So, the NBR formulated a fresh strategy.

The NBR strategy stated that the privileged people of the society and the privileged entrepreneurs in the industry sectors mostly enjoy the benefit of tax rebates, causing a loss to gross domestic product (GDP).

According to the organisation, people from all classes do not bear the tax burden rationally. That is why NBR planned to reduce tax rebates rationally.

WHAT NBR WILL DO

The NBR said five activities under its strategy will be undertaken in the next two years to cut tax rebates. First, assessing sector-based tax rebates; second, reducing tax rebates rationally after review; third, coordination with other ministries and departments on tax rebates; fourth, formatting a standard operating guideline and fifth, lifting tax rebates gradually.

NBR’s three departments – Tax Policy, VAT Policy and Customs Policy – would carry out these tasks within the first quarters of 2027.

SECTOR-WISE TAX REBATES

The NBR prepared three reports on the rebates of customs and taxes since 2023.

Review of the reports said tax payers enjoyed a little over Tk 2.73 trillion in tax rebates in forms of income tax, VAT, supplementary duty, import duty and excise duty in a single fiscal.

The NBR collected a little over Tk 1.58 trillion in VAT and supplementary duties in the 2020-21 fiscal while tax rebates in this sector were Tk 1.3 trillion.

The NBR also received a little over Tk 1.58 trillion in VAT and supplementary duties in the 2021-22 fiscal while tax rebates in this sector were Tk 1.3 trillion.

Tax rebates also exceeded tax collections in the form of income tax. The NBR collected Tk 828.71 billion in income taxes in the 2020-21 fiscal while tax rebates was a little over Tk 1.16 trillion.

Tax rebates are mainly offered on the tax holidays and the final tax liability of tax deducted at source.

The NBR collected Tk 374.75 billion in import duty and excise duty in the 2021-22 fiscal, according to another report of the agency.

More than 200 notifications were issued on tax rebates over the last five decades. Now, an NBR team is working to formulate a plan to lift these tax facilities.