IMF mission inquires about slow growth of revenue receipts

The fact-finding mission from the International Monetary Fund (IMF) inquired about the slow growth of direct tax collection under the National Board of Revenue (NBR).

A four-member delegation from the Washington-based lender, led by Mission Chief Chris Papageorgiou, raised the issue during their scheduled closed-doors meeting with NBR officials at the tax authority's headquarters in Agargaon.

"The delegation asked why we failed to meet the IMF's revenue collection target in the previous fiscal year and what measures to increase revenue collection have been taken for FY25 and FY26," a top NBR official who attended the meeting said on condition of anonymity.

"It's a form of taking accountability," he told The Daily Star yesterday.

"We explained our real situation to them and said what we have done in recent times, including measures to increase tax return submissions."

The IMF mission also underscored the need to increase the tax-GDP ratio, which is one of the lowest in the world, by a minimum of 0.5 percent in each of the coming years, the official said.

The IMF mission arrived in Dhaka on Monday as part of a weeklong visit to assess Bangladesh's potential financial needs after the country sought an additional $3 billion loan.

The multilateral lender emphasised revenue mobilisation, especially as Bangladesh witnessed an 11 percent drop in revenue collection in the first two months of this fiscal year.

The tax authority logged Tk 42,106 crore in revenue in the July-August period, which is Tk 15,000 crore short of the revenue collection target for the period.

The target for the entirety of FY25 has been set at Tk 480,000 crore.

The NBR official further said that the mission had enquired about the tax expenditures and various reform measures, including automation of the taxation system and processes.

"We have been asked to reduce tax exemptions in a rational way," the official added.

The IMF team also agreed to extend their assistance for automation.

On a positive note, the team expressed satisfaction over the state of indirect taxation.

Md Bodruzzaman Munshi, second secretary of VAT Act and Rule at the NBR, said: "The fact-finding mission was pleased with the value-added tax collection.

"Last fiscal year, we crossed the IMF's VAT collection target, gathering over Tk 150,700 crore."

He added that the delegation asked to submit both medium- and long-term revenue strategies by December this year as well as provide an update on the progress of the digital transformation process.

The IMF mission held four meetings with the NBR yesterday, including the three wings for income tax, value-added tax and customs.