Bangladesh lost an estimated Tk 226,236 crore in tax revenue in 2023 due to widespread evasion and avoidance, according to new research by the Centre for Policy Dialogue (CPD).
Of this staggering figure, corporate tax evasion alone accounted for approximately Tk 113,118 crore - representing nearly 50% of the total loss, the think-tank revealed at a press briefing on corporate income tax reform held at its Dhaka office on Monday (21 April).
The study highlights a sharp increase in tax evasion over the past decade, with estimated losses standing at Tk 96,503 crore in 2012 and surging to Tk 133,673 crore by 2015.
The CPD identified several systemic flaws contributing to Bangladesh’s persistent tax evasion woes. These include elevated tax rates, fragile enforcement mechanisms, convoluted legal procedures, and endemic corruption within the tax administration.
“From a tax justice perspective, high levels of tax evasion undermine overall compliance, disincentivise honest taxpayers, and shift the burden onto those adhering to the law,” the report noted.
As Bangladesh prepares to graduate from Least Developed Country (LDC) status, the CPD underscored the urgent need for bolstered institutional readiness. It cautioned that increased investment flows—particularly from multinational corporations—may exacerbate opportunities for evasion and avoidance if left unchecked.
To address these vulnerabilities in the post-graduation landscape, the CPD called for sweeping reforms, including institutional strengthening, digitisation of tax infrastructure, and alignment with global tax norms. It also emphasised the need for greater international cooperation to ensure a transparent and equitable tax environment.
Furthermore, the think-tank proposed a gradual overhaul of the corporate income tax (CIT) structure to ensure that rates do not fall below 15% for either export-oriented or non-export sectors, in line with global minimum tax agreements.
As part of this reform, the government should consider raising the current 12% CIT rate applicable to export-oriented industries such as the ready-made garments sector - to 15%, the CPD recommended.
