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“When we meet investors, everybody talks about taxes because their investment decisions are being impacted by NBR,” said Sapkota.

He said NBR often overrides investment promotion agencies. For instance, they introduce an investment facilitation programme, but in the middle of the year, NBR can issue a regulation that effectively nullifies it.

“Basically, there is no predictability of what is going to happen. So, I can see a reason why everybody says NBR,” said Sapkota.

Drawing on his experience in five countries, he said, “I think no other country has this kind of system, where you have agency that supersedes pretty much everything.”

To raise tax collection, he emphasised digitisation and stronger compliance.

The ADB economist said, “Even if you increase taxes, if the compliance regime is not tackled, your tax will not actually increase that much, but then people who are already paying taxes will be burdened more.”

He said the tax administration system must make it very difficult to avoid paying taxes. For example, it’s impossible to evade taxes in India, because everybody has an Aadhaar Card without which none can do anything.

In Bangladesh, he said, the national ID card should be linked with TIN and bank accounts to close that loop. He also suggested reducing multiple VAT rates to two or three to reduce leakages.

“The incentive mechanism, when they rationalise the taxes, should be designed in such a way that this is growth enhancing, productivity enhancing, rather than helping some sort of zombie firms to sustain operation for the sake of employment,” said Sapkota.

Fahmida Khatun, executive director of local think tank Centre for Policy Dialogue (CPD), said tax exemptions in Bangladesh continue indefinitely despite limited fiscal space. “If you really want to incentivize, there should be a sunset clause. But, once an exemption is in place, that goes forever,” she said.

AK Khan, chairperson of Business Initiative Leading Development (BUILD), said local investors face similar frustrations.

As a local investor, we also feel that there are a lot of constraints when we do or think of investments, which shows a huge gap between policy and practice, said Khan.

He pointed to weak coordination among ministries. NBR, the commerce ministry and other ministries often adopt separate policies on the same subject, leading to conflict and uncertainty.

And there is a serious conflict in policies that frustrate investors. He suggested running institutional reform, institutional coordination, and policy consistent and predictable.

M Masrur Reaz, chairman and chief executive of Policy Exchange Bangladesh, presented a paper at the event. He said higher corporate taxes raise the effective cost of investment and cited the Organisation for Economic Co-operation and Development (OECD) data showing that FDI falls 3.7 percent for every 1 percent rise in the tax rate.

Bangladesh ranks 105th out of 141 countries in the Global Competitiveness Index due to weak business dynamism, poor product market conditions, low skills performance and infrastructure deficits, he said.

To build an investment-enabling fiscal framework, Reaz called for tax reform, greater efficiency in the annual development programme, institutional reform, improved budget credibility and fiscal consolidation.

Rupali Huque Chowdhury, president of FICCI, and Shams Zaman, a FICCI director, also spoke at the event.