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The government is set to roll out sweeping reforms in the upcoming national budget to expand the VAT net and tighten compliance across businesses—without increasing tax rates.

Finance Minister Amir Khasru Mahmud Chowdhury is expected to place the budget on June 11, with proposals focusing on bringing more enterprises—especially from the informal economy—under the tax system.

Key measures include making a Business Identification Number (BIN) mandatory for trade licence renewal and requiring all businesses to submit VAT returns online from the next fiscal year.

Officials said the proposals, prepared by the National Board of Revenue (NBR), aim to raise an additional Tk 200 billion in VAT revenue by expanding coverage and improving compliance.

“We have limited scope to increase tax rates. We will have to focus on expanding the tax net and curbing tax evasion,” the finance minister said.

Focus shifts to compliance

Tax officials have been instructed to prioritise widening the tax base, as a large number of businesses—particularly in the retail segment—remain outside effective VAT monitoring.

A senior NBR official acknowledged that compliant businesses often face difficulties, while a significant portion of retail transactions still escape the tax net.

Experts urge deeper reforms

Mustafizur Rahman of the Centre for Policy Dialogue said the tax authority has yet to make meaningful progress in installing electronic fiscal devices in retail shops.

“We have not seen progress in digitising VAT collection at the retail level,” he said, though he welcomed efforts to expand the VAT base.

He stressed the need to address sectors where VAT is collected from consumers but not deposited into the treasury, adding that Bangladesh’s revenue-to-GDP ratio—at 7.9 per cent—remains far below the South Asian average.

VAT consultant Md Daud Faraizy noted that existing laws still allow manual VAT return submission in some cases.

“Legal amendments are needed to make online filing mandatory,” he said.

Chartered accountant Snehasish Barua said digitisation would reduce manual errors and limit informal dealings.

“Mandatory online filing would simplify the system and improve transparency,” he said, adding that combining it with e-invoicing could enable automated verification and real-time data tracking.

Push for digital tax system

Currently, around 700,000 businesses hold electronic BINs, but having one is not mandatory for trade licence renewal or even for opening a business bank account.

Officials believe making BIN compulsory and enforcing online VAT returns will significantly modernise tax administration, enhance transparency and strengthen revenue mobilisation in the next fiscal year.