Government backs NBR overhaul, says split ‘will reduce conflict of interest’

The interim government has said it split the National Board of Revenue (NBR) into two parts to enhance efficiency, reduce conflicts of interest, and expand Bangladesh’s tax base.

The Chief Advisor's Office (CAO) issued a statement on Tuesday, a day after the ordinance was passed, amid calls for a work stoppage by a section of NBR officials.

“This decision is not only about administrative reform,” the statement read. “Its core objective is to separate tax policy-making from tax administration, to increase efficiency, reduce conflict of interest and broaden the tax-GDP ratio.”

The caretaker administration issued the ordinance on Monday night, following draft approval by the Advisory Council on Apr 17.

It bifurcates the NBR into a Revenue Policy Division and a Revenue Administration Division.

On Tuesday, the NBR Reform Unity Council, a platform of tax officials, called for a three-day pen-down strike, demanding that the decision be revoked.

Officials' associations had earlier complained that their views had not been considered before the move.

Citing NBR’s historical “underperformance”, the CAO said the board, in place for nearly five decades, has consistently failed to meet revenue targets, with Bangladesh holding one of the lowest tax-to-GDP ratios in Asia.

“To meet the country’s development goals, the current 7.4 percent tax-to-GDP ratio must be increased to at least 10 percent,” the statement said.

It added, “Reforming NBR’s structure is essential to reach that target. When both policy-making and implementation rest within a single institution, it leads to inefficiency and unethical practices — a view that has long gained consensus.”

The CAO referred to complaints from business leaders. “Policies have often been crafted with revenue collection as the sole focus, neglecting fairness, growth, and long-term economic planning.”

CHRONIC ISSUES WITHIN NBR

The CAO said combining tax policy and implementation under one roof had eroded transparency and allowed irregularities to flourish.

“There is no accountability framework for officials involved in tax collection. Many are known to accept favours from tax evaders and, at times, even assist in evasion for personal gain.”

It noted the absence of any objective system to assess officials’ performance and said promotions were not merit-based.

Having one organisation responsible for both drafting policy and executing administration has hindered focus in either area, it said, shrinking the tax net and leaving collection far behind its potential.

According to the statement, the NBR has long suffered from poor enforcement, a lack of investment-friendly conditions, and institutional corruption, all of which have undermined investor confidence and weakened the rule of law.

Currently, the same person heads both the Internal Resources Division and the NBR, which has created administrative complexities and hampered the formulation and execution of effective policies, the CAO noted.

HOW THE NEW STRUCTURE WILL WORK

Under the new structure, the Revenue Policy Division will focus on lawmaking, setting tax rates and managing international tax treaties.

Meanwhile, the Revenue Administration Division will handle collection, auditing and compliance.

“This separation means those who determine taxes will no longer be collecting them—removing opportunities for backroom deals,” the statement read.

If each division can concentrate on its own responsibilities, professional capacity will rise, internal conflict will decrease, and institutional transparency and accountability will improve, the office said.

According to the statement, the reform will help broaden the tax base, reduce reliance on indirect taxes, and strengthen direct tax collection through skilled personnel.

“A dedicated policy unit will be able to craft sensitive, data-driven and forward-thinking tax policy—not just to meet short-term revenue goals, but to support broad-based economic growth,” it added.

The statement also noted that a transparent and predictable tax policy alongside a professional tax administration would help attract investment and reduce complaints from the private sector.

It added, “This restructuring is not merely an administrative shift—it is a timely and essential move to lay the foundation for a fair, efficient, and sustainable tax system.

“Strong policymaking and corruption-free tax administration can move Bangladesh closer to fulfilling the aspirations and needs of its people.”