Bangladesh's VAT-GDP ratio is not improving to a satisfactory level as the country's major sectors involved with goods and services are largely enjoying VAT exemptions, according to the National Board of Revenue (NBR). 

"Almost 50 per cent of goods and services are covered by VAT exemptions, which is contributing to a low VAT-GDP ratio in the country," said Syed Mushfequr Rahman, commissioner, Customs, Excise & VAT Commissionerate, Chattogram division.

Other major reasons include the prevalence of a culture of evading tax payments, inadequate infrastructure and a lack of skilled manpower, automation and good governance, he said.

Rahman was addressing a seminar on VAT's contribution to national development at "Revenue Conference 2023" organised by the NBR in Bangabandhu International Conference Center yesterday.

The NBR has a list of 489 products exempted from VAT alongside 50 services, he said.

However, the VAT-GDP ratio will increase significantly if these exemptions are further rationalised, he added.

The main obstacles to proper VAT collection include exemption of VAT at different rates at different levels and misunderstandings over the VAT law, he added.

The NBR should expand it tax net countrywide, suggested Mostafa Azad Chowdhury Babu, vice-president of the Federation of Bangladesh Chambers of Commerce and Industry.

"The NBR should not put pressure on businesses which are already under the tax net," he said.

The NBR's initiatives of installing three lakh electronic fiscal devices (EFDs) should be expedited at retail and wholesale stores across the country, he said.

Addressing as chief guest, Commerce Minister Tipu Munshi said the NBR would have to face major challenges in the coming future once Bangladesh makes the United Nations status graduation form a least developed to a developing country.

"The NBR should put emphasis on increasing the collection of income tax and expand the tax-GDP ratio," he said.

Abu Hena Md Rahmatul Muneem, chairman of the NBR, chaired the event.