Bangladesh lost Tk 2.26 lakh cr to tax evasion: CPD

Bangladesh lost an estimated Tk 2,26,236 crore in tax revenue in 2023 due to widespread tax evasion and avoidance, according to a study by the Centre for Policy Dialogue (CPD).

Of this amount, nearly 50 percent—approximately Tk 1,13,118 crore—was attributed to corporate tax evasion.

The findings were shared at a CPD briefing on corporate income tax reform, held in Dhaka on Sunday, as part of discussions on fiscal preparedness ahead of Bangladesh’s graduation from Least Developed Country (LDC) status.

The study revealed a rising trend in tax evasion over the years, with estimated losses reaching Tk 96,503 crore in 2012 and Tk 1,33,673 crore in 2015.

CPD identified several contributing factors behind the persistent issue of tax evasion in Bangladesh, including high tax rates, weak enforcement mechanisms, a complex legal framework, and corruption within the tax administration.

“High levels of tax evasion erode public trust in the tax system and place an unfair burden on compliant taxpayers,” the report stated, highlighting the need for urgent reforms.

The CPD cautioned that Bangladesh’s upcoming LDC graduation could attract greater foreign investment, especially from multinational corporations, which may further increase the risk of tax avoidance unless preventive measures are taken.

To address the challenges, the CPD recommended strengthening tax institutions, modernising digital infrastructure, and reforming existing tax policies. It also emphasised the need for international cooperation and alignment with global tax agreements to ensure transparency and fairness.

The think-tank further proposed a gradual reform of the corporate income tax (CIT) structure. It recommended that the statutory tax rate for both export-oriented and non-export sectors should not fall below 15 percent, in line with the global minimum tax standard.

As part of this reform, the CPD suggested increasing the current CIT rate for export-oriented industries, including the ready-made garment (RMG) sector, from 12 percent to 15 percent.