Corruption Major Obstacle in Tax System: NBR Chairman

The Chairman of the National Board of Revenue (NBR), Md. Abdur Rahman Khan, stated that corruption is a significant barrier in the tax system. He emphasized that preventing corruption in tax administration is possible only through establishing accountability and good governance. He also highlighted the lack of tax education in Bangladesh, noting that tax-related topics are included only in a few higher education courses. Considering the importance of tax education, it is necessary to incorporate tax-related subjects at the primary, secondary, and higher education levels.

On Saturday (July 26), Md. Abdur Rahman Khan, FCMAA, made these remarks as the chief guest at a shadow parliament organized by Debate for Democracy on tax system reforms, held at FDC. The event was chaired by Hasan Ahmed Chowdhury Kiron, Chairman of Debate for Democracy.

The NBR Chairman further stated that establishing good governance in tax administration is challenging without the reflection of political goodwill. Due to the current government’s political goodwill, decision-making to ensure good governance in tax administration has become easier. He noted that more tax exemptions are granted than the amount of tax collected. The NBR has taken initiatives to amend tax laws, which will prevent the government from granting tax exemptions arbitrarily. Tax exemptions will only be considered through the Finance Bill in the national interest by the parliament. He described under-invoicing and over-invoicing in imports and exports as a collective failure, adding that in today’s world, the price of goods globally can be checked with a click of a button. Banks and customs authorities can verify prices during the opening of letters of credit to ensure accurate pricing. If goods are not imported or exported at their actual value, compliant companies and genuine taxpayers suffer. In his speech, Hasan Ahmed Chowdhury Kiron, Chairman of Debate for Democracy, said that the movement opposing the division of the NBR into tax policy and tax administration units was wisely halted by the protesters. However, he expressed hope that the government would consider the legitimate demands of revenue department officials and employees. He believes that with collective efforts, dividing the NBR into two units could yield positive results. However, there is concern that such reforms might increase the dominance of the administrative cadre, potentially reducing opportunities for the revenue cadre. If NBR reforms lead to revenue officials losing promotion opportunities or status, it could create disparities in the sector. Typically, NBR members are appointed from income tax, customs, and VAT officials, holding first or second-grade positions equivalent to secretaries. He further noted that revenue officials fear that splitting the NBR could deprive them of these opportunities and increase the dominance of the administrative cadre. To address these concerns, a clear organizational structure for the proposed divisions should be outlined. Excessive punitive measures and administrative intimidation in the revenue department could create frustration, leading to reluctance and lack of confidence among officials, which may hamper tax collection and reduce revenue. Weaknesses, discrimination, corruption, and unfair practices in tax administration hinder effective revenue collection. Complaints persist that taxpayers, from ordinary individuals to high-net-worth taxpayers, face harassment by tax officials. Many ordinary taxpayers are harassed in the name of audits, and tax officials often misuse their authority during file audits. There are allegations of a significant racket involving tax file audits, with some peons, computer operators, clerks, and certain tax lawyers creating a trap by threatening taxpayers with audits, leading to bribery. Taxpayers often fall into this trap out of fear. Notably, Debate for Democracy proposed a seven-point recommendation to increase revenue collection. In the shadow parliament titled “Reforms in Tax Administration Are Key to Achieving Desired Revenue,” organized by Debate for Democracy, the debaters from Green University of Bangladesh defeated the team from Chittagong Ma O Shishu Hospital Medical College. The judges for the competition were Professor Abu Mohammad Rais, Dr. Shakila Jesmin, journalist Mainul Alam, journalist Daulat Akter Mala, and journalist Abul Kashem. At the end of the competition, participating teams were awarded trophies, crests, and certificates.