---

The National Board of Revenue (NBR) has been tasked with achieving an ambitious 35 per cent year-on-year increase in tax revenue collection in the current fiscal year (FY26), despite a record low performance in FY25, raising concerns among economists and taxpayers alike.

According to official data, the government has set a revenue collection target of Tk 4.99 trillion for FY26, compared to the actual collection of Tk 3.70 trillion in the just-concluded fiscal year. The NBR will now need to significantly ramp up collections across all three of its major wings — income tax, VAT, and customs.

An analysis of the NBR’s sectoral targets shows:

• The income tax wing must collect 42.63% more than last year.
• The VAT collection target has been raised by 30.49%.
• The customs duty collection must rise by 29%.

The sharp increases come on the heels of one of the weakest collection years in the NBR’s history, with overall growth in FY25 at just 2.23% — a figure dragged down by political unrest, poor investment sentiment, and internal organisational challenges.

Notably, tax collection in June — typically the strongest month — fell 37.6% short of the monthly target and posted a 19% year-on-year decline, according to officials.

Experts Call Targets Unrealistic

Economists have expressed skepticism about the feasibility of meeting the inflated targets under current economic conditions.

“These are not realistic expectations,” said Dr Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD). “Taxpayers are already under strain due to inflation and stagnant income. Aggressive enforcement could further hurt the business environment.”

She also pointed to the lack of structural reform within the revenue authority, noting the government’s failure to implement the long-promised separation of tax policy and administration. The ordinance aimed at restructuring the NBR — expected to be enacted by July 31, 2025 — remains stalled.

A senior NBR official, requesting anonymity, cited unrest within the agency, sluggish ADP execution, and dampened investment as key reasons behind last year’s underperformance.

“In a typical year, June brings in two to three times more revenue. FY25 was a major deviation,” he said.

Broader Fiscal Implications

In response to the revenue slump, the Ministry of Finance has adopted a conservative fiscal posture. Public expenditure is expected to shrink to 12.7% of GDP in FY26, and the development budget has been slashed to a four-year low, signalling limited fiscal space for new projects.

Former Bangladesh Bank governor and Finance Adviser Dr Salehuddin Ahmed said the government is attempting to manage the shortfall through reduced expenditure, but warned that prolonged revenue underperformance could strain development goals and debt sustainability.

Adding to the uncertainty are new tariffs imposed by the US on Bangladeshi exports, which analysts warn could erode competitiveness — especially for small and medium-sized exporters — and further suppress tax receipts.

“Businesses are still waiting for stability,” Dr Khatun said. “With rising production costs and falling profitability, their capacity to absorb higher taxes is shrinking.”

She warned that without institutional reforms and improved trust between the tax authority and taxpayers, collection drives may increasingly rely on coercion, undermining both compliance and economic recovery.