Tax recovery push stalls as businesses resist payments
Graphics: Agamir Somoy
Business owners are not responding as hoped to the initiative of Finance Minister Amir Khosru Mahmud Chowdhury to collect outstanding revenue.
Although concessions for paying outstanding taxes, meetings with business owners, and initiatives to settle cases through the Alternative Dispute Resolution (ADR) system have been undertaken, not much progress has been made so far.
Those concerned attribute this to officials’ reluctance to give concessions, legal complications, long delays in tax payment by business owners, and weak business conditions.
According to the National Board of Revenue (NBR), revenue amounting to Tk 82,757 crore is stuck due to ongoing litigation in various courts. Of this amount, Tk 36,700 crore is tied up in the income tax sector, Tk 36,200 crore in the value-added tax (VAT) sector, and Tk 9,857 crore in the customs sector.
Special emphasis has been placed on collecting outstanding revenue since the beginning of the 2026-27 fiscal year. As part of this effort, initiatives have been taken to collect revenue by resolving disputes through ADR.
Amendments were also made to the law in the previous budget. However, even after three months of the fiscal year have passed, expected progress has not been observed. NBR sources said a list of about 50 institutions was prepared by its three divisions and sent to the Ministry of Finance.
Revenue totaling nearly Tk 50,000 crore is owed by these listed institutions. The finance minister took the initiative to hold meetings with the owners of the listed institutions. However, so far, only representatives of the owners of mobile phone operators have attended the meeting.
Former NBR member (Tax Policy) Syed Aminul Karim told Agamir Somoy that collecting outstanding taxes through ADR requires concessions from both sides - the revenue officials and the business owners. But there is a lack of mindset to give concessions.
In many cases, if officials grant concessions, there is a fear that they may face harassment, due to which they do not want to take risks. There are legal complications that need to be reformed. According to NBR data, Tk 36,700 crore is stuck in 5,500 income tax-related cases. Among these, about Tk 15,000 crore in revenue is involved in 16 large tax cases. The list of these cases has been submitted to the finance minister.
Meanwhile, Tk 36,200 crore is tied up in 11,684 VAT-related cases. Out of this, Tk 28,800 crore in revenue is involved in ongoing cases in the High Court alone. On the other hand, Tk 9,857 crore is stuck in 12,335 customs-related cases.
Economists believe that the capacity of business owners must also be taken into consideration when collecting outstanding revenue. Former lead economist of the World Bank’s Dhaka Office, Zahid Hussain, told Agamir Somoy that business owners generally prefer to hold onto money. Even when given opportunities, they are not complying.
However, the business environment in the country is also not good, and many institutions are struggling just to keep their businesses afloat. He said due to the prevailing business situation, many firms are facing financial distress, and therefore their capacity must be taken into account regarding the payment of outstanding revenue.
The revenue collection target for the 2026-27 fiscal year is Tk 6,04,000 crore. In the previous fiscal year, collection stood around Tk 4,15,000 crore. As a result, the revenue stuck in courts is equivalent to nearly 14 percent of the fiscal year’s target and about 20 percent of the total collection from the previous fiscal year.
A month-wise action plan has been undertaken to recover outstanding revenue. The objective is to deposit money into the government treasury through the speedy disposal of cases involving large sums of revenue.
However, NBR officials believe that along with eliminating legal complications, creating opportunities for compromise between business owners and revenue officials is essential for this purpose.
