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“Weak enforcement is a major issue. When many non-filers face little or no consequences, the cost of non-compliance becomes very low,” he said. “Many treat tax payment as optional in this situation.”

Islam highlighted the growing gap between registration and actual compliance.

“Many people obtain TINs for administrative reasons but lack the ability or incentive to file returns. This problem is made worse by the large informal economy, where many businesses operate without proper accounts or reliable records,” he further said.

Prof Islam also said the tax system itself can be a barrier. “Frequent legal changes, multiple requirements, and complex procedures make it harder to comply, especially for small businesses and individual taxpayers.”

While making online filing mandatory for individuals was a positive step, Islam said digitalisation alone cannot solve the problem. “Limited digital literacy and technical barriers can discourage timely filing. Repeated deadline extensions may weaken enforcement.”

“Tax compliance depends on trust and fairness. When people believe public funds are not used properly, they are less willing to pay taxes. At the same time, widespread non-compliance becomes the norm,” he said.

He said the economic impact could be serious. Low compliance leads to a low tax-to-GDP ratio, greater reliance on borrowing, and mounting fiscal pressure.

“A small group of compliant taxpayers ends up carrying most of the burden, which is unfair and distorts the business environment. In the long run, this weakens the state’s capacity,” he said.

“To fix the problem, Bangladesh needs stronger enforcement, a simpler tax system, better services, and greater trust between the government and taxpayers,” he added.

PROPOSED QUARTERLY FILING SYSTEM

Amid low submissions, the NBR is considering a year-round, quarterly tax filing system from the next fiscal year 2026-27.

Speaking at a pre-budget meeting on Wednesday, NBR Chairman Md Abdur Rahman Khan said the plan aims to improve compliance.

Under the proposal, the filing period would be divided into four quarters. Taxpayers would receive incentives for filing in the first quarter, pay standard rates in the second, and face higher costs or surcharges in the third and fourth quarters.