Government increases VAT to improve tax-to-GDP ratio: CA Press Secretary

Chief Adviser’s Press Secretary Shafiqul Alam stated on Sunday that the government is striving to achieve a healthier tax-to-GDP ratio by implementing a uniform 15% Value Added Tax (VAT). This initiative aims to bolster the country's economic growth. 

Speaking at a press briefing held in the evening at the Foreign Service Academy, Alam highlighted that Bangladesh’s tax-to-GDP ratio has been declining since 2021. He revealed that this year, the shortfall in revenue collection has reached approximately Tk42,000 crore over the last five months. “Out of the targeted Tk1,69,000 crore, only Tk1,26,000 crore has been collected so far,” he explained. 

Alam underscored that Bangladesh’s tax-to-GDP ratio is among the lowest globally, stressing the importance of improving it for the country’s growth and the welfare of its citizens. To address this, the government has adjusted VAT rates on certain items and is working to streamline VAT to a simplified 15% rate to minimize tax leakage.

After resuming office, the government has also been prioritizing the reduction of public expenditure, he said, pointing out the widespread misuse of public funds under the previous regime. As an example, he mentioned the construction of a seven-star hotel near the Karnaphuli Tunnel in Chattogram, which cost Tk450 crore of public money, allegedly for the convenience of former minister Saifuzzaman Chowdhury.

Alam warned that if the tax-to-GDP ratio continues to decline, Bangladesh might face challenges in managing its debt repayments. Therefore, raising taxes has become necessary, with the revenue aimed at improving public welfare. 

Addressing questions about the impact of the increased taxes, Alam assured that the effects on citizens would be minimal. He also emphasized that recovering laundered money is a top priority for the government. Efforts are underway to trace the destinations of siphoned funds, with ongoing cooperation from countries where the money is believed to have been laundered.

Chief Adviser’s Deputy Press Secretaries Apurba Jahangir and Abul Kalam Azad Majumder, along with Assistant Press Secretary Suchismita Tithi, were also present at the briefing.