Bangladesh’s heavy reliance on indirect taxes disproportionately affects commoners, who bear a far greater burden from VAT and similar duties than the rich.
In the final quarter of FY26 (April–June), indirect taxes—including value-added tax (VAT), supplementary duties, and import duties—accounted for 63.1% of total revenue collected by the National Board of Revenue (NBR).
Data from Bangladesh Bank shows NBR collected over Tk80,491 crore in indirect taxes during this period, up 21.9% from the previous quarter and 12.9% year-on-year, triggering fresh calls for structural reform.
This consumption-heavy tax structure disproportionately hits low-income households, which spend a larger share of their earnings on basic necessities.
A joint study by Supro and Oxfam Bangladesh revealed that VAT imposes a regressive tax burden of 12.1% on poor households, compared to just 5.9% for wealthy ones.
Despite being conducted several years ago, the study remains directly relevant as revenue mobilization still hinges predominantly on indirect tax collection.
Domestic and import VAT remained the largest contributor in the fourth quarter, rising to Tk48,175 crore—a 32.1% quarterly increase and a 19.3% gain year-on-year.
Supplementary duty collection reached Tk19,532 crore, up 31.1% from the prior quarter but down 0.3% compared to FY25.
Meanwhile, import duties climbed 24.1% quarterly to Tk9,615 crore, though still 1.6% lower year-on-year.
To fix this persistent imbalance, former NBR chairman Muhammad Abdul Mazid urged the government to expand direct taxation based on taxpayers' income and ability to pay.
He raised concerns over whether taxes deducted at source are actually deposited into the government exchequer, suggesting Bangladesh adopt India's model of splitting tax administration into dedicated direct and indirect boards (CBDT and CBIC).
Separating the NBR's policy formulation from its implementation functions would also boost efficiency, accountability, and enforcement.
