Policy Brief  

Tax System Digitalization to Enhance Revenue Mobilization in Bangladesh

This policy brief focuses on improving tax implementation, with the hope that the impact of administrative reforms will be accelerated and amplified if undertaken simultaneously with fundamental tax policy reform.

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Bangladesh’s tax-to-GDP ratio has remained stagnant at 6%–8% for many decades, a level that is very low compared to peer countries and would need to more than double to achieve ambitious national development goals. This poor performance is due to policy distortions and weak administration. Disaggregation of tax revenue indicates an unsustainable tax structure that is subject to acute political pressures and implementation capacity challenges.

The fastest way to significantly increase tax revenue is to reduce tax expenditures. However, since tax policy is largely determined by political considerations, this policy brief focuses on improving tax implementation, with the hope that the impact of administrative reforms will be accelerated and amplified if undertaken simultaneously with fundamental tax policy reform.

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