Bangladesh loses tax revenue of Tk 840b in informal sector: CPD

Bangladesh is missing tax revenue of Tk 840 billion each year due to irregularities, institution inability and tax avoidance tendency, according to study of Centre for Policy Dialogue (CPD) published on Monday.

The study also found that around 68 per cent of people do not pay income tax even after earning taxable income.

The CPD, a think tank, presented the study in a media briefing at its Dhanmondi office.

The study has been entitled “Corporate Tax Transparency Issues and Concerns in Bangladesh Its Implications on Tax Losses and Social Spending.”

Khondaker Golam Moazzem, research director of CPD, presented the research paper. CPD executive director Fahmida Khatun moderated the programme.

Moazzem said that 68 per cent of people do not pay income tax even after earning taxable income. That is, two-thirds of people do not pay tax even when they are eligible to pay tax. This is the major reason why the tax GDP ratio has not increased.

On the other hand, 213,000 companies are registered in Joint Stock Company, but only 45 thousand companies have filed returns, he said.

He said, the size of the informal sector in Bangladesh is 30 per cent of GDP. The amount of tax in the informal sector was Tk220 billion in 2010, which increased to Tk 840 billion in 2021.

About Tk 840 billion tax loss occurs in the shadow economy which is also called informal economy. If this money was included, then the expenditure on the social security sector could be tripled. In other words, the main obstacle to the growth of the tax net is the informal sector, the study said.

A large portion remains out of tax, resulting in the tax loss that is increasing day by day, Moazzem said.