Transparency International Bangladesh (TIB) believes that initiating a new project without careful consideration and blindly following donor prescriptions without learning from past mistakes is shortsighted and amounts to wasteful spending of public funds.
Multiple digitization and automation projects have been undertaken to increase revenue collection and improve transparency in public expenditure management and audit activities, despite yielding little result. This raises the question of why these projects have failed to achieve their objectives. Without investigating previous failures and finding solutions, the government is preparing to launch yet another costly project.
At the same time, the anti-corruption organization has called for ensuring the use of modern technology, particularly artificial intelligence (AI), to simplify income tax collection and curb tax evasion, while also prioritizing domestic technological capacity and potential.
According to media reports, the National Board of Revenue (NBR), with the help of the World Bank, is planning a project valued at approximately Tk1,000 crore to enhance income tax collection and prevent tax evasion.
Although the revenue department has implemented at least three major projects over the past 15 years to boost domestic resource mobilization through digitization and automation, none have produced tangible results.
In a statement issued on Saturday, TIB Executive Director Dr Iftekharuzzaman said: “The recurrent attempt to start another Tk1,000 crore project based on World Bank financing is a significant indication that these projects fell short of their goals. Processes such as filing income tax returns or VAT collection have not yet been made online; the paperwork-based system remains the primary method for revenue collection. Harassment and corruption persist. Invoice fraud remains uncurbed, while tax evasion and money laundering continue unchecked."
He added, "the tax-to-GDP ratio has not increased—in fact, it has declined over the past 12 years. In FY2024, it fell to 8.5%, whereas it was 9.1% 12 years ago. The average during that time is even lower at 7.4%, placing Bangladesh among the countries with the lowest tax-to-GDP ratios globally. Given this reality, why have the projects implemented over the years failed to achieve their objectives? It is important to figure out how much of this failure is caused by the NBR being held hostage by the revenue department's corrupt syndicates, the unwillingness to use domestic technological capacity and potential, and the lack of consistency in tax policy.”
A five-year project, titled "Strengthening Institutions for Transparency and Accountability (SITA)", formulated with World Bank support, has been allocated a budget of $250 million to simplify the income tax management process, achieve complete automation, improve statistical systems, enhance transparency in public procurement and investment management, and strengthen audit functions.
A significant portion of this project will be dedicated to automating public revenue and expenditure management.
Recalling bitter experiences with previous technology-based projects, particularly in the revenue department, Dr Iftekharuzzaman noted: “The software provided by the contractor to automate income tax management ultimately could not be used earlier. Instead, a local e-return filing system was developed at a lower cost."
"Similarly, in another project, vendor-locked or commercial-off-the-shelf (COTS) software was purchased in accordance with donor conditions, leading to management challenges. Under such circumstances, rather than blindly following donor prescriptions in new projects, technologies should be selected based on practical use and sustainable capacity. Serious consideration must be given to building NBR’s own technical infrastructure through maximum use of existing domestic technological capabilities and potential in this regard,” Dr Zaman added.
"Usually, technology or software providers are accountable for training and developing the necessary workforce," Dr Zaman said, expressing surprise at the inclusion of a provision to establish a skill development centre for Systems, Applications, and Products in Data Processing (SAP) technology under the project.
"Why is such a specialized centre being established with borrowed money, and for whom? This has to be investigated. Whether there is an ulterior motive to obligate the revenue department to a specific proprietary software for a long period of time must also be taken into account. It is imperative to prioritize the possibility of involving domestic technology firms in such initiatives, provided that they possess the necessary competency and potential,” he added.
