Tax reform and broadening the tax base in Bangladesh

Tax revenue as a share of GDP in Bangladesh remains at a very low level compared to the peer countries in the region and beyond. In fiscal year 2014-15 (FY15) tax GDP ratio was 10.26 percent compared to 9.69 percent in FY14. Therefore enhancing revenue mobilization remains a central objective in government fiscal policy. The need for strengthening of the tax administration is integral to achieving the target set under the Seventh Five Year Plan of tax GDP ratio of 14 percent by FY20. Since a major section of the Bangladesh economy still falls under the informal sector it is one of the main reasons behind the slow increase in the number of income taxpayers as well as limiting the potential VAT collection. Initiatives and incentives by the government to formalize these activities and would greatly enhance the revenue mobilization.