STAFF CORRESPONDENT

The interim government has replaced the five-decade-old tax authority with two new entities as part of sweeping reforms aimed at modernising tax administration and boosting revenue receipts.

The newly established Revenue Policy Division will be responsible for designing tax laws, setting rates, and managing international tax treaties while the Revenue Management Division will oversee enforcement, audits, and compliance for income tax, VAT and customs.

The restructuring, enacted through an ordinance late Monday, dissolved the Internal Resources Division and the National Board of Revenue (NBR), an agency established in 1972 to mobilise revenue for the newly independent nation. The new ordinance will take effect upon the issuance of a separate circular.

The move is widely seen as a response to long-standing calls from multilateral lenders and domestic experts to raise Bangladesh’s chronically low tax base.

The reform is tied to a condition under a $4.7 billion loan programme from the International Monetary Fund, which requires the separation of tax policy and administration, an international best practice aimed at reducing conflicts of interest and improving governance.

Officials said the overhaul is critical as the country confronts mounting fiscal pressures, including a decline in foreign exchange reserves. The interim administration, led by Nobel laureate Muhammad Yunus, has framed the change as part of a broader effort to strengthen public finance and institutional efficiency.

“The NBR has consistently failed to meet its revenue targets,” the Chief Adviser’s Office said in a statement yesterday, adding that Bangladesh’s tax-to-GDP ratio is approximately 7.4 percent, one of the lowest in Asia.

For context, the global average stands at 16.6 percent.

“To achieve the development aspirations of its people,” Bangladesh must raise its tax-to-GDP ratio to at least 10 percent, according to the statement.

“Restructuring the NBR is critical to this goal. There is growing consensus that a single institution should not be responsible for both creating tax policy and enforcing it -- such an arrangement breeds conflicts of interest and promotes inefficiencies,” the Chief Adviser’s Office added.

However, the move has been met with strong resistance from within the tax bureaucracy. NBR officers and staff demonstrated in front of the agency’s headquarters yesterday, demanding the repeal of the ordinance. Under the banner of the NBR Reform Unity Council, they also announced a three-day pen-down strike beginning today, though they pledged to exempt international passenger services, export operations, and budget-related activities.

Critics within the Customs and Income Tax cadres argue that the ordinance sidelines experienced tax professionals, transferring policy-making powers to officials from the general administration cadre. They claim the final ordinance includes only a minor revision from the draft version, slightly narrowing the policy division’s scope.

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