Bangladesh Spends 21 Paisa to Collect Tk 100 in Taxes: How much do other Asian countries spend?
Graphics: Agamir Somoy
The national revenue collection process is crucial to ensuring sound economic management and sustainable development in any country. To collect revenue, governments have to maintain an administrative infrastructure that involves a certain amount of operating expenditure. In economic terms, this is known as the “cost of collection ratio.”
In terms of administrative expenditure on national revenue collection, Bangladesh is in a relatively cost-efficient position compared with other South Asian countries. Bangladesh spends only 21 paisa to collect every Tk 100 in revenue, the lowest among countries in the region.
Although this may appear to be good news, experts say it is by no means a reason for complacency. They say lower costs do not necessarily mean that the administration is highly efficient. Rather, they largely reflect the narrow tax base, manpower shortages and structural weaknesses, all of which affect tax collection. As a result, tax collection falls short of its targets.
According to information presented in a working paper at a recent meeting of the Parliamentary Standing Committee on the Ministry of Finance, Bangladesh spends only 21 paisa in administrative costs to collect every Tk 100 in revenue. In contrast, the cost is considerably higher in developed and emerging economies. According to the data, developed country Japan spends Tk 1.03 to collect every Tk 100 in taxes. Thailand spends 71 paisa, while neighboring India spends 60 paisa to collect every Tk 100.
How Much Do Other Asian Countries Spend?
According to reports from the International Monetary Fund (IMF) and the revenue authorities of individual countries, Sri Lanka generally spends between Tk 1 and Tk 1.50 to collect every Tk 100 in revenue. According to the Federal Board of Revenue of Pakistan, the cost of collecting every Tk 100 in revenue in the country generally ranges from 40 to 60 paisa.
According to data from Nepal’s Inland Revenue Department and Department of Customs, the country spends about Tk 1 to Tk 1.25 to collect every Tk 100 in taxes. According to the Department of Revenue and Customs of Bhutan, the cost of collecting every Tk 100 in revenue is approximately Tk 1.50 to Tk 2 or more.
According to information from the National Board of Revenue (NBR) presented at the parliamentary committee’s second meeting, 86 percent of the government’s total revenue comes from the NBR. The NBR’s revenue collection target for fiscal year 2025-26 was Tk 415,000 crore, which was 20.6 times higher than 25 years ago. For fiscal year 2026-27, the revenue collection target has been set at Tk 604,000 crore, equivalent to 64.8 percent of total budget expenditure and 86.9 percent of total revenue.
However, the meeting identified several challenges and limitations in achieving this huge target.
It was reported that only 58 percent of the NBR’s total sanctioned positions are currently filled, leaving nearly one-third of the positions vacant. A significant number of the 12,764 sanctioned positions in the income tax department remain vacant. It was also noted that operating tax policy and tax administration under the same structure has hindered efficiency for a long time. The meeting also highlighted the absence of an integrated taxpayer database incorporating risk-based audits, e-TIN, e-returns and e-TDS, as well as API-based information sharing with the National ID, land registration and BRTA systems.
The NBR said that of the 13 million TIN holders currently registered, only 4.7 million file tax returns, while fewer than 2 percent of taxpayers are subject to risk-based audits. To change this situation, the NBR has placed the highest priority on AI-based taxpayer identification, TIN database cleansing, profiling high-net-worth individuals and implementing transfer pricing.
Experts say that collecting revenue at a low cost alone cannot be considered a sign of administrative efficiency. Although Bhutan and Nepal have somewhat higher collection costs, they place greater emphasis on expanding the tax base. In contrast, the low cost of revenue collection in Bangladesh and Pakistan largely reflects heavy reliance on large taxpayers and customs duties, as well as the significant opportunities for tax evasion.
Former National Board of Revenue member (tax policy) Syed Aminul Karim told Agamir Somoy that Bangladesh’s lower direct cost of tax collection compared with other countries reflects structural limitations and the narrowness of the tax base.
“This means we are not investing enough in revenue collection. We do not have sufficient infrastructure, manpower or training to collect more revenue. Most of the taxes that are collected come voluntarily or through the normal course of activities. That is why greater investment is needed in tax collection. Although such investment may appear to increase costs at first glance, it will also result in higher revenue collection as a benefit,” he said.
