Trade misinvoicing is a collective failure

The failure to check trade misinvoicing is a collective failure of the authorities, National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan said yesterday, describing the situation as "alarming".

His remarks came just days after a new study showed that trade-based money laundering accounts for around 75 percent of the funds siphoned off from Bangladesh over the previous years.

"In today's digital era, the global price of any product is readily available at the touch of a button," Khan said at a programme in Dhaka.

The Bangladesh Institute of Bank Management (BIBM), in its study last week, estimated that trade-related outflows from Bangladesh amount to $16 billion a year.

That figure is equivalent to 3.4 percent of the GDP and more than the country's entire annual health budget.

Speaking at the event organised by Debate for Democracy at the Bangladesh Film Development Corporation in Tejgaon, the NBR chairman stressed the importance of proper valuation in trade.

"Banks and customs authorities can verify these values when issuing letters of credit. If goods are not imported or exported at fair market value, it is the compliant businesses and honest taxpayers who bear the brunt," he said.

Khan also pointed to corruption as a major barrier to an effective tax system, emphasising that accountability and transparency are vital to eliminating malpractice.

He noted that good governance in tax administration remains difficult without political will.

"Thanks to the political commitment of the current government, decision-making has become more streamlined, facilitating the establishment of sound governance practices within the tax system. At present, the volume of tax exemptions granted exceeds the actual tax collected," Khan said.

He added that the NBR has launched several initiatives to reform existing tax laws, with the aim of strengthening governance and boosting national revenue.

The government, he said, can no longer grant tax exemptions at will. "There is now a defined process. In the national interest, only Parliament can approve such exemptions through a finance bill," said Khan, who is also a secretary of the Internal Resources Division under the Ministry of Finance.

Highlighting the lack of awareness and educational focus on taxation, Khan said tax education is almost absent in Bangladesh.

"Only a few higher education courses offer even minimal exposure to tax-related subjects. Given its national importance, tax education must be integrated into the curricula at the primary, secondary, and tertiary levels."

Hasan Ahmed Chowdhury Kiron, chairman of Debate for Democracy, presided over the event.

In his speech, Kiron welcomed the recent decision by protesters to halt demonstrations against the proposed abolition of the NBR and the separation of tax policy and administration into distinct bodies.

"I hope the government will carefully consider the legitimate concerns of revenue officials and staff. If implemented with consensus, dividing the NBR into two distinct bodies—one for tax policy and another for tax administration—could yield positive outcomes," Kiron said.

"However, some believe such reforms may strengthen the dominance of the administrative cadre, while diminishing prospects for the revenue cadre. If the restructuring negatively affects promotion and rank opportunities for revenue officials, it may complicate inequality within the service."

He also noted that NBR members are usually drawn from the income tax, customs, and VAT departments, holding officer ranks equivalent to first- or second-grade secretaries.

Debate for Democracy put forward seven key recommendations for enhancing revenue collection.

Prof Abu Muhammad Rais and journalists Doulot Akhter Mala, Shakila Jasmine, Mainul Alam, and Abul Kashem also spoke at the programme.