Written by The Banking Post
Growth in corporate VAT receipts fell to 4.47% in FY25, sharply down from previous years, as a sluggish business environment hit large taxpayers and graft in collection processes further constrained revenue, according to National Board of Revenue (NBR) sources.
The Large Taxpayers Unit (LTU) under the VAT wing collected Tk769.53 billion in FY25, up from Tk736.60 billion a year earlier, but fell short of its annual target by Tk83.37 billion. Officials say the slowdown in VAT growth from large taxpayers—traditionally a double-digit contributor—has a direct impact on overall revenue performance and often leads to budget shortfalls.
Despite economic headwinds, VAT receipts from 25 of LTU’s 34 sectors posted growth last year. However, nine sectors saw declines, including the Bangladesh Telecommunications Regulatory Authority, luxury hotels, ceramic tiles, telecom equipment, food products, packaging materials, paper, water supply, and soap manufacturing.
Tobacco remained the largest revenue source under LTU, with three companies—led by British American Tobacco—paying Tk367.61 billion, up Tk12.45 billion from FY24. The mobile telecom sector followed, contributing Tk119.75 billion, a nearly 10% rise, while five large gas companies paid Tk118.34 billion, up almost 4%. Seventeen major banks paid Tk38.68 billion, reflecting a 5.78% increase.
Industry insiders note that VAT collection from cigarette makers typically rises 12–16% annually, but growth slowed sharply this year after the government raised Supplementary Duty (SD) in January. NBR officials acknowledged that the tax hike failed to boost revenue and may have encouraged cigarette smuggling.
Former NBR member Farid Hossain said LTU’s revenue collection remains over-reliant on tobacco taxes, warning that even a small decline in this sector can significantly affect overall revenue. He urged the revenue authority to diversify sources, curb corruption in VAT collection, and tap into Bangladesh’s untapped tax base to raise the tax-to-GDP ratio from its current 7–8% to at least 16%.
