The Policy Research Institute (PRI) has unveiled a transformative roadmap aimed at restructuring Bangladesh’s fiscal architecture. The ambitious proposal seeks to catapult the nation’s tax-to-GDP ratio from its current stagnant level of approximately 8% to a robust 15–20% by 2035. This strategic shift is designed to reduce the state’s reliance on trade tariffs while bolstering direct tax collection to ensure long-term economic sustainability.
Table of Contents
Shifting the Fiscal Paradigm
At a press conference held at the PRI headquarters in Banani, the Chairman of the Research Institute and head of the relevant task force, Dr Zaidi Sattar, detailed the findings of the report titled “Tax Policy for Development: A Reform Programme for Reorganising the Tax System.” The report, which has already been submitted to the Chief Adviser, advocates for a fundamental pivot from indirect to direct taxation.
Historically, Bangladesh has relied heavily on trade-related taxes (customs duties), which currently contribute 28% of total revenue. The PRI recommends slashing this contribution to just 7.5% over the next decade. Dr Sattar argued that high tariffs have stifled investment and consumption, creating an environment where businesses prefer local market protection over global export competitiveness.
Key Strategic Targets for 2035
The task force identified 55 priority areas for reform across three major sectors: direct tax, Value Added Tax (VAT), and customs duties. The proposal suggests a radical rebalancing of the tax mix to achieve a more equitable system.
| Fiscal Metric | Current Status | 2035 Target |
| Tax-to-GDP Ratio | ~8% | 15% – 20% |
| Direct Tax Contribution to GDP | 2.5% | 9% – 10% |
| Customs Duty Contribution to GDP | 2.5% | 1.0% |
| Indirect vs. Direct Tax Ratio | 70:30 | 50:50 |
| Number of VAT Rates | 7 – 8 Rates | 1 – 2 Rates |
Promoting Export Diversification
Dr Sattar warned that the current “anti-export bias” is preventing the emergence of new billion-dollar export sectors, leaving the economy dangerously dependent on Ready-Made Garments (RMG). By lowering import duties, the government can facilitate “Ease of Doing Business” and prepare the nation for its graduation from Least Developed Country (LDC) status, thereby avoiding potential anti-dumping measures in international markets.
Structural Reforms and Enforcement
The report further suggests simplifying the VAT structure. Mohammad Zahid Hossain, Chairman of Krishi Bank and task force member, noted that the current system of seven to eight different VAT rates is overly complex. He proposed a transition toward a unified single rate.
Furthermore, Snehasish Barua highlighted that to reach the target of 50% direct tax contribution, personal income tax rates must be effectively managed, and corporate tax structures must be refined. Meanwhile, Mohammad Mehedi Hasan from ICAB pointed out that existing penalties for failing to file tax returns—such as the 4% transaction fine—are rarely enforced due to a lack of comprehensive data. He called for the immediate development of a robust, integrated database to track financial activities.
The PRI concludes that without these aggressive reforms, Bangladesh risks falling into a “revenue trap” that could stall its journey toward becoming a developed economy.