Two Million Businesses to Be Brought Under the VAT Net
National Board of Revenue to expand VAT Net to earn more revenues. File photo.
The National Board of Revenue (NBR) has taken a new initiative to expand the country’s narrow VAT base. The agency plans to increase the number of VAT-registered businesses to two million within the next year. As part of this effort, letters have been sent to 465 trade associations across the country requesting lists of their member firms. Officials believe that collecting information from trade bodies is a key step toward expanding the VAT net.
Because the VAT base remains narrow, the NBR has to rely on the same group of taxpayers every year. This increases the risk of tax evasion and prevents revenue growth from reaching desired levels. At the same time, international lending institutions are putting pressure on Bangladesh to raise its tax-to-GDP ratio.
According to NBR officials, there are currently about 800,000 VAT-registered businesses in the country. Of these, around 70 percent—roughly 550,000 firms—submit VAT returns regularly. However, compared to the size and growth of the economy, this number is still considered insufficient.
An NBR official said that letters have been sent to 465 trade associations nationwide asking for lists of their member companies. These lists will be forwarded to the relevant VAT commissionerates, which will then verify the information and take steps to bring businesses without VAT registration under the system.
Officials added that a large number of businesses across the country remain outside the VAT registration framework, increasing pressure on revenue collection.
For the next fiscal year, the NBR’s total revenue target may be set at Tk 6.04 trillion, with more than Tk 3 trillion expected to come from VAT alone. In the current fiscal year, the VAT collection target was Tk 1.86 trillion. Stakeholders say that achieving such an ambitious target will not be possible without significantly expanding VAT registration.
The letters sent by the NBR ask trade associations to provide a complete list of their member businesses, along with separate information on those enterprises that do not have a BIN (Business Identification Number). This will help identify which businesses are VAT-registered and which remain outside the registration system. At the same time, the authority aims to identify businesses that are closed or inactive.
NBR officials say the country’s VAT net is still relatively narrow. As a result, the burden of revenue collection falls heavily on a small number of regular taxpayers. This not only hampers the government’s expected revenue collection but also creates inequality within the tax system.
Mohammad Azizur Rahman, Member (VAT Policy) of the NBR, said that many businesses have been operating for a long time without VAT registration. He added that even among those with a BIN, many do not submit returns regularly, preventing the country from realizing its true revenue potential.
He also noted that using information from trade associations would make it possible to bring businesses that are still outside the system under VAT registration. At the same time, monitoring firms that do not submit VAT returns regularly would become easier.
However, a section of the business community believes that increasing oversight alone is not enough. They argue that the VAT registration and return submission process must be made simpler, more transparent, and fully digital.
