MD ASADUZ ZAMAN

More than 64 percent of registered taxpayers, including individuals and companies, did not file income tax returns for the fiscal year 2025-26, even after authorities extended the deadline four times.

Of nearly 1.28 crore Taxpayer Identification Number (TIN) holders, only around 46 lakh, including nearly 20,000 companies, submitted returns by March, up from 42.5 lakh last year, according to the National Board of Revenue (NBR).

Most filings for FY26, which is around 42.97 lakh, were made online, while 3.04 lakh were paper-based.

The weak response comes at a moment when the government urgently needs revenue to ease mounting fiscal pressure. Tax compliance continues to pose a major challenge for Bangladesh, affecting revenue, administrative efficiency, and the broader tax system.

Despite reforms and efforts to widen the tax net, only about one-third of TIN holders submitted returns -- a key document detailing income, expenses, and other financial information. The low filing rate contributes to one of the world’s lowest tax-to-GDP ratios, even as the economy has grown over the past decade.

This shortfall comes as the government faces tighter fiscal space due to an increase in borrowing, higher social safety net spending, and surging energy costs caused by external shocks linked to the US-Israel war on Iran.

Low tax compliance restricts the government’s investment in infrastructure, education, and healthcare. In the first eight months of the current fiscal year, total tax revenue, including VAT and customs duties, fell nearly 28 percent short of the Tk 554,000 crore target, though collections rose 12 percent year-on-year.

Meanwhile, external debt repayments rose, with $2.9 billion paid in principal and interest in the July-February period of FY26, up from $2.63 billion a year earlier.

STRUCTURAL ISSUES DRIVE NON-COMPLIANCE

Prof Deen Islam, an economics teacher at Dhaka University, said low compliance reflects deeper structural problems rather than procedural gaps.