Indefinite Tax Waivers Trimmed to Five-Year Limit

Economic Tag: Vat & Tax

Bangladesh’s National Board of Revenue (NBR) has implemented a Sunset Clause limiting tax exemptions to five years, scrapping six indefinite waivers, including for Bangabandhu Memorial Trust, President Abdul Hamid Foundation, and CRI. This move aligns with development partners’ conditions, such as the IMF, to enhance the tax-GDP ratio and curb fiscal imbalances. The tax exemptions for entities like Shurer Dhara and Lalit Mohan-Dhanbati Memorial Foundation, previously granted for unlimited periods, were also withdrawn. Tax benefits for sectors like fisheries, poultry, and apparel—often politically influenced—are being reviewed under fiscal reforms to establish clear deadlines and reduce tax expenditures. The initiative helps forecast revenue recovery timelines and meets global policy standards, but past delays in cutting tax expenditures contributed to the IMF withholding full loan disbursements. Tax expenditures for FY22-23 included VAT (3.26% of GDP), direct taxes (3.56%), and customs (0.76%).

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