Ahead of the upcoming FY27 national budget, the National Board of Revenue (NBR) has structured significant overhauls to the domestic tax and Value Added Tax (VAT) systems.
The government aims to maximize revenue collection while expanding the tax net to bring the country's vast informal economy under formal fiscal monitoring.
However, macroeconomists and corporate leaders fear that deploying aggressive revenue policies during a phase of elevated inflation, reduced purchasing power, and stagnant private investment could place a heavy burden on ordinary consumers and small-scale entrepreneurs.
Finance Minister Amir Khosru Mahmud Chowdhury is scheduled to present a national budget layout of approximately Tk930,000 crore to the national parliament on June 11.
To sustain this massive expenditure framework, the state's revenue mobilization targets are being pushed to historic heights.
During a recent pre-budget discussion with the Economic Reporters Forum (ERF), NBR chairman Abdur Rahman Khan indicated that the upcoming fiscal blueprint will focus heavily on widening the active VAT network rather than raising baseline tax rates.
To curb tax evasion, the regulator plans to introduce advanced technology-driven tracking systems, with strict monitoring applied to the production and retail points of packaged goods, especially cigarettes.
Furthermore, to cross-match entities that operate commercially without clearing taxes, information sharing between the NBR and the Registry of Joint Stock Companies and Firms (RJSC) will be strengthened.
In tandem, the board is initiating a drive to purge inactive or long-dormant Taxpayer Identification Numbers (TINs).
Currently, business entities are legally mandated to register for VAT if their annual commercial turnover reaches or exceeds Tk30 lakh. The upcoming budget proposes to lower this baseline threshold to Tk20 lakh.
This structural shift means that small neighborhood retailers registering an average daily sales volume of just Tk5,500 will be brought under mandatory VAT tracking.
Revenue officials argue that millions of small-scale enterprises across union and upazila levels remain entirely outside the formal tax net.
To bring them into the fold, the NBR aims to boost the country’s active VAT registration base from the current 800,000 enterprises to an ambitious 2 million within the next financial year.
To enforce compliance, the government plans to tie access to essential commercial infrastructures directly to the possession of a Business Identification Number (BIN).
Under the proposed framework, a verified BIN will be mandatory to open or operate a commercial bank account under a business name, register real estate, land deeds, or corporate vehicles, secure industrial utility connections, including electricity, gas, and water lines, and open merchant Mobile Financial Services (MFS) accounts.
The NBR plans to link major MFS operators—including bKash, Nagad, Rocket, and mCash—directly into the state’s integrated e-VAT system.
This integration will give the central tax authority real-time visibility into micro-merchant transaction histories and corresponding VAT filings.
To manage compliance for micro-merchants, the NBR plans to reintroduce a simplified filing structure.
The historically popular "Package VAT" framework is being revived under a new designation: Specific VAT.
Under this framework, small shopkeepers will not be required to maintain complex financial ledgers or file monthly tax documents.
Instead, clearing a flat, fixed VAT amount via authorized banking or MFS channels will automatically satisfy their annual statutory return obligations.
The specific VAT liabilities will be calculated based on the geographical region and the nature of the commercial enterprise.
Sources within the NBR indicate that a trial flat-rate VAT of just Tk1,000 per year is being considered for micro-enterprises whose aggregate annual turnover falls within a Tk50 lakh ceiling.
While tax planners argue that collecting nominal sums from millions of informal merchants will significantly bolster the state exchequer, trade association leaders fear that once this baseline structure is institutionalized, the government will steadily increase the flat rates in future fiscal cycles.
NBR demands full roster logs from trade associations
As part of its network expansion strategy, the NBR has officially directed 465 trade and commercial organizations across the country to hand over comprehensive registries of their active memberships.
The directives mandate the submission of full merchant names, verified physical addresses, and existing BIN credentials.
However, this aggressive step has met with resistance from trade leaders.
Mostafa Azad Chowdhury, president of the Bangladesh Cold Storage Association, noted that members will feel penalized simply for holding an official association membership, warning that such measures could erode institutional trust within trade organizations.
During the current fiscal year, the collection target for VAT was fixed at Tk186,000 crore.
Moving into the upcoming fiscal cycle, the revenue target for the VAT segment alone is projected to rise above Tk223,000 crore, while the NBR's aggregate revenue target could touch Tk604,000 crore.
Driven by these high baselines, state planners are prioritizing the structural widening of the tax and VAT nets over raising base tax rates.
To optimize revenue collections, the government plans to withdraw existing tax exemptions across several manufacturing segments, raising the baseline VAT rate from 7.5% to a full 15% on items such as plastic furniture products, plastic household kitchenware, domestic refrigerators, and residential Air Conditioners (ACs)
Manufacturing representatives note that a doubling of the VAT rate will instantly drive up the retail cost of domestic refrigerators by Tk2,000 to Tk3,000, while air conditioning units will see retail price hikes of Tk3,000 to Tk4,000.
Industrialists warn that these price hikes will dampen domestic retail demand and hurt export competitiveness.
Similarly, the construction sector faces challenges as the NBR considers a 10% increase in specific taxes at the production point for MS rods and structural steel.
While revenue officials maintain that this adjustment will add a nominal Tk150 to Tk200 per ton, industrial steel manufacturers counter that the real estate sector is already facing sluggish demand, and new tax burdens will worsen market conditions.
In a positive move for sustainable industries, the government is considering complete VAT exemptions for eco-friendly consumer goods, including products manufactured from betel nut husks, biodegradable hogla leaf utilities, and traditional earthenware and clay pottery items.
These goods are currently subject to a 15% VAT rate. Entrepreneurs believe that completely removing this tax burden will attract fresh green capital into alternative manufacturing sectors.
Prof Mustapha K Mujeri, former director general of the Bangladesh Institute of Development Studies (BIDS), noted that national budget priorities must focus primarily on stimulating private investment, expanding employment opportunities, and containing inflation.
He warned that relying solely on aggressive tax and VAT expansions to hit revenue targets risks squeezing consumer demand, which could negatively impact industrial production, corporate investments, and long-term job creation.
