REJAUL KARIM BYRON

The International Monetary Fund is set to tighten the noose on the Bangladesh government over its dismal revenue mobilisation by making the remaining fund disbursement under a $4.7 billion loan conditional on meeting the tax collection target.

Until now, the tax collection target has not been a Quantitative Performance Criteria (QPC), mandatory benchmarks that the country must meet to unlock instalments under the loan programme.

The IMF staff mission on their last visit to Dhaka indicated that they would make tax collection target a QPC, The Daily Star has learnt from finance ministry officials involved with the negotiations.

The staff mission was in Dhaka last month to assess the country’s performance before the release of the fourth tranche of the loan.

“Bangladesh’s low tax-to-GDP ratio calls for urgent tax reforms to establish a fairer, more transparent system and sustainably increase revenue, focusing on rationalising exemptions, improving compliance and separating tax policy from administration,” said the staff mission on the conclusion of the visit.

The IMF’s emphasis on ramping up tax collection comes after recommendations for measures to boost revenue were not reflected in the budget for fiscal 2024-25.

The measures include scaling back corporate income tax exemptions and depletion allowances, raising previously reduced VAT rates on several products to the full 15 percent statutory rate, introducing an additional personal income tax bracket for high-income earners and increasing the tax rates on tobacco and select products.

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