Govt backtracks on revenue sector reform too

The BNP government is not immediately presenting in Parliament, in the form of a bill, the ordinance that the interim government had issued to reform the revenue sector.

As a result, the ordinance will lose its effectiveness. Analysts say that through this, the government is stepping back even from “non-political” reforms such as those in the revenue sector. However, this reform is very important for the country’s economy.

Fulfilling a long-standing expectation, the interim government issued the Revenue Policy and Revenue Management Ordinance-2025 on 12 May, 2025, reforming the revenue sector. Under this, the structure of the National Board of Revenue (NBR) was reorganised into two divisions.

One is the Revenue Policy Division, whose responsibilities include formulating tax policy, amending laws, handling international agreements, research, etc. In other words, the task of determining tax rates would be done by the Revenue Policy Division. The other division is Revenue Management, which would mainly handle tax collection.

This reform had long been demanded by businesspeople. Economists had also been giving the same recommendation.

After the BNP government took office, a special committee of the National Parliament recommended that several ordinances issued during the interim government not be immediately presented as bills in Parliament. Among them is the Revenue Policy and Revenue Management Ordinance-2025. If it is not presented in Parliament by 10 April, it will lose its effectiveness.

During its 18 months, the interim government issued 133 ordinances. Of these, it has been recommended that 4 be repealed and 16 not be immediately presented as bills in Parliament.

These include one related to the appointment of Supreme Court judges, two related to the Supreme Court Secretariat, three related to the National Human Rights Commission, two related to the prevention of enforced disappearance, and one related to the Anti-Corruption Commission.

Analysts say that due to political positions, the BNP may have differing views on various ordinances. But it is being seen that even a “non-political” ordinance like revenue sector reform is not being brought to Parliament.

The government’s stance on this ordinance may create uncertainty regarding the next two installments of the International Monetary Fund (IMF) loan and obtaining new loans.

It is notable that during the Awami League government, the loan taken from the IMF (which has risen to USD 5.5 billion) had an installment due last December, which was not received. Two installments totaling USD 1.3 billion are expected in June. At the same time, the new government is considering seeking an additional USD 2 billion loan from the IMF.

Former NBR chairman Mohammad Abdul Majid, who headed the revenue sector reform committee formed during the interim government, told Prothom Alo last night that no government had previously carried out this reform in the revenue sector, although it was necessary.

The interim government had implemented it. He added that before the reform, the NBR both formulated policy and collected taxes, and accountability could not be ensured. There was room for arbitrariness in the exercise of power.
Abdul Majid said that the current government is talking about reviewing the ordinance. He hopes they will continue this reform in the revenue sector.

The NBR is an agency under the Internal Resources Division of the Ministry of Finance, responsible for determining tax rates and collecting them. In the 2025–26 budget, the revenue collection target is Tk 5.64 trillion, of which 88 per cent has been assigned to the NBR.

When the government prepares the budget, tax rates are set across various sectors. There are allegations that the consideration in this process is to collect additional revenue. This creates pressure on low-income people, businesses, and others. Tax rates are frequently changed with revenue considerations in mind, which creates uncertainty for investors.

Economists say that a country’s industrialisation, investment, employment, development of new sectors, and commodity prices depend on tax policy.

Tax policy should be based on these considerations, not merely on increasing revenue and ease of collection. For this reason, there has long been a recommendation to assign tax policy formulation and tax collection responsibilities to two separate entities. This recommendation was never heeded. Under pressure from IMF conditions, the decision was made to assign revenue collection and policy formulation to two separate entities.

To reform the revenue sector, a committee headed by former NBR chairman Mohammad Abdul Majid was formed in October 2024. Based on the interim report of that committee, the interim government issued the Revenue Policy and Revenue Management Ordinance-2025 on 12 May, 2025. Through this, the NBR was abolished and two divisions—Revenue Policy and Revenue Management—were created.

After the ordinance was issued, a large section of NBR officials and employees launched a protest. Their argument was that if implemented according to the main ordinance, it would increase the opportunity for relatively less experienced officials from other cadres to be appointed in policy formulation and tax collection in the revenue sector. Customs and tax cadres would be deprived.

The one-and-a-half-month-long protest created significant stagnation in revenue collection activities. Later, the protesting NBR officials and employees withdrew from the movement through mediation by business leaders. On the other hand, the interim government formed a review committee led by then adviser Muhammad Fouzul Kabir Khan. At the same time, steps were taken against the protesters.

Based on the recommendations of the committee led by Fouzul Kabir Khan, the Revenue Policy and Revenue Management (Amendment) Ordinance, 2025 was issued on 1 September, 2025. It stated that the government would appoint any government official with experience in macroeconomics, trade policy, planning, revenue policy, or revenue management as secretary of the Revenue Policy Division. In other words, the likelihood of appointing officials from the customs and tax cadres increased.

There is uncertainty among top NBR officials as to why the BNP is not immediately placing the ordinance in Parliament. A member of the organisation, on condition of anonymity, told Prothom Alo that he believes the new government wants to reform the revenue sector—but not by turning the ordinance into law. Rather, it wants to review it afresh and present it as a bill before enacting it into law.

Relevant individuals say that if the BNP had turned this ordinance into law in Parliament, it would not have faced fresh complications. In attempting to amend the ordinance, it may face pressure from bureaucrats and protests from the NBR. It may also face questions from the IMF.

The World Bank–IMF Spring Meetings will be held in Washington, USA, from 13 to 18 April. A 14-member delegation led by Finance and Planning Minister Amir Khasru Mahmud Chowdhury will attend. To manage the economic pressure created by the war in the Middle East, the government may seek an additional USD 2 billion loan from the IMF.

Finance and Planning Minister Amir Khasru Mahmud Chowdhury told Prothom Alo last Tuesday at the Secretariat that the overall picture of the country’s economy would be presented at the Spring Meetings, as that is the nature of the event. Discussions will also be held on the release of the sixth installment of the ongoing loan programme and some relaxation of IMF conditions.

The interim government had also issued the Bank Resolution Ordinance (2025), which created an opportunity for bank mergers. The special committee has recommended presenting it in Parliament in an amended form. A 10-member committee led by Additional Secretary of the Financial Institutions Division Azimuddin Biswas was formed on 1 April to amend and enact this ordinance into law. However, no such initiative has been taken regarding the revenue sector ordinance.

Abul Kasem Khan, chairman of the business-led research organisation Business Initiative Leading Development (BUILD), told Prothom Alo that businesspeople have been recommending for many years that tax policy formulation and tax collection be handled by two separate entities. If a single entity performs both functions, various problems, conflicts of interest, and biases arise.

He said this separation is necessary for transparency and accountability. Backtracking from this reform would not be right at all.