The National Board of Revenue, the country’s apex tax authority for tax administration, is still far from operating normally, as its officials remain in a state of panic due to alleged punitive measures imposed for their participation in protests against the division of the NBR into two separate bodies.

According to a section of NBR officials, although the trend of suspensions of protesters has stopped, “punitive” transfers and “harassment” by the Anti-Corruption Commission (ACC) continue unabated.

The unideal state of this vital government organ is raising fears of lower revenue collection, which could further widen the fiscal deficit. Last year, the shortfall in revenue collection stood at Tk92,400 crore.

As a result of punitive measures and ACC actions, most officials are unwilling to take risks to increase state revenue. If this situation persists, officials fear a significant shortfall in revenue collection by the end of the year.

Many current and former officials of the organisation believe that the morale of officials in this state agency, which plays a crucial role in the country’s economic development, is being eroded.

For instance, they point out that audits, which generate tax claims, are a powerful tool of the NBR. Approximately 75% of tax collection occurs through this mechanism. However, in the first three months of the current fiscal year, almost no new claims have been generated. Concerns are growing about the impact this may have by the end of the fiscal year.

Former NBR chairman Badiur Rahman said that the way the organisation has been divided has caused discontent among the officials.

“When there are instability or job-related threats, no one acts in the interest of the state. Naturally, revenue officials will behave similarly. Consequently, there is no doubt that revenue collection will decline,” he told TIMES of Bangladesh on Sunday.

“I fail to understand what the interim government, controlled by NGO professionals, hopes to achieve by creating instability in institutions like the NBR,” he added with a frustrated voice.

When contacted, NBR Member (Customs and VAT Administration) Moazzem Hossain denied the allegations of harassment, said that the current administration is following a zero-tolerance policy against corruption.

“Therefore, if any officer engages in corruption or breaches discipline, the administration will take action against them. However, there is no reason for honest and hardworking officials to be afraid,” he added.

The ACC also denied any allegations of harassing any NBR personnel.

Speaking on condition of anonymity, NBR officials said that due to the protests in June, revenue that could not be collected at the time was deposited in July, resulting in a significant increase in revenue for that month. In August, a substantial inflow from the banking and cigarette sectors allowed NBR to avoid negative growth.

However, in August this year the revenue from most tax zones and VAT commissionerates decreased compared to the same period last year (2024). It is worth noting that August 2024 was a particularly difficult month for business and trade due to the anti-government movement.

An anonymous official told TIMES, “It seems a certain quarter is working to halt the country’s economic progress. As part of this, the morale of the officials’ is being undermined by maintaining instability in this important state institution.”

He explained that the IMF only urged an increase in the tax-to-GDP ratio. It did not specify how the NBR should be divided. By splitting the board and placing revenue officials under the administrative cadre, the government has created numerous problems.

Farid Uddin, a member of the NBR Reform Commission, constituted by the interim government, alleged in a September event that the government bypassed their proposed methodology to divide the NBR. The commission was dissolved the following day.

The senior leadership of the NBR is showing a lax attitude towards the irregularities and corruption of the officials under their control, according to the opponents of the current chairman, Md Abdur Rahman Khan. As an example, they cite the instance in which Belal Hossain Chowdhury was removed from his membership the day after an ACC case was filed against him and was appointed as the head of an important tribunal.

A former NBR member, speaking anonymously, said: “At the field level, a panicked situation is prevailing due to continuous transfers, postings, and punishments. Revenue collection is faltering. Only one example is enough: how Abdur Rahman Khan is trying to protect and facilitate a member facing a corruption case. Abdur Rahman Khan is blind when it comes to officials loyal to him.”

Investigations at Customs Houses reveal an even more alarming picture. Under-invoicing, over-invoicing, and misdeclarations in imports and exports are routine. However, in the past three months, cases filed for these offences have decreased by at least 50%, which is worrying for the country’s economy.

Customs authorities, however, claim that increased compliance among importers and the posting of inexperienced officials in the field has led to this reduction.

NBR Chairman Khan himself complained at a meeting with businesspeople on September 7 that field-level officials were not adequately implementing the directives of the revenue board.

Reasons for panic

Following the NBR restructuring, officials participating in the June protests faced various punitive measures, including mandatory retirement, temporary suspension, and disciplinary transfers.

On 12 May, an ordinance was issued dissolving the NBR and creating two separate divisions: “Revenue Policy” and “Revenue Administration.” Since that decision, NBR officials and staff had engaged in continuous protests demanding reasonable reforms.

On June 28 and 29, NBR officials and employees observed a nationwide work stoppage. Later, with mediation from businesspeople, the protest was withdrawn. However, punitive actions continue even after the suspension of the protest.

At least six officials were forced into compulsory retirement, 36 officials and employees suspended, and over 1,500 officials transferred to various locations, considered punitive by the departments. Several officials were transferred three times within a single week. For instance, NBR Member Md Lutfor Rahman was transferred three times in one week.

Even in projects that had concluded, several officials were transferred there. For example, the VAT online project ended two years ago, yet some officials were recently posted there, much to the surprise of the officials. Corrections were made later.

ACC ‘harassment’

NBR officials claim that “harassment” through the ACC has significantly increased recently. Complaints have already been filed with the ACC against officials who openly led protests, and investigations are ongoing.

ACC officials have also conducted raids at various NBR field offices, including recent operations at Chittagong and Mongla Customs Houses, increasing officials’ anxiety.

Additionally, for the first time, the Internal Resources Division under the Ministry of Finance is taking ACC clearance for promotions of NBR officials. The process has become lengthy, delaying the promotions of two batches of officials.

Officials fear that once clearance requirement is made permanent, harassment will increase further.

Former NBR member Syed Aminul Karim said, “Requiring ACC clearance for promotion is a repressive decision. Once established, officials will be unable to focus on work, hampering revenue collection.”

However, ACC Director General (Prevention) and spokesperson Md Akhtar Hossain told TIMES on Sunday, “ACC takes action only if there is a specific complaint against someone. There is no scope for signalling out any particular person or group.”

Revenue collection situation

The revenue target is Tk 4.99 trillion for the current fiscal (2025-26), requiring monthly growth of 35% to achieve.

In July–August, total revenue collected was Tk 544.23 billion, compared to Tk 450.05 billion in the same period last year — a growth of 21% in the first two months.

However, the revenue meeting in August presented a different picture. Several participating officials indicated that most tax zones and VAT commissionerates experienced negative growth in August. Only substantial revenue from the cigarette and banking sectors contributed to overall growth.

Despite this, the institution could not avoid a revenue shortfall, which stood at Tk 65.77 billion in the first two months of the fiscal year.

IMF conditions for revenue growth

Despite progress in foreign currency reserves and debt repayment, Bangladesh has failed to meet the IMF’s revenue collection targets that pushed for 0.5 percentage points rise every year in the tax-to-GDP ratio. In the FY25 it instead dropped to 6.6%, from 7.4%.

Bangladesh’s tax-to-GDP ratio remains among the lowest in the world, prompting the IMF to emphasise revenue growth.

Bangladesh set a target for 10.5% tax-to-GDP ratio by 2030, while Sri Lanka is almost there already.

As a condition for loan disbursement, the IMF is effectively asking for tough measures, including imposing taxes on the remittances sent by over ten million expatriates who work abroad in strenuous conditions.

Former lead economist at the World Bank Dhaka office, Zahid Hossain, told TIMES “During July–August last year, revenue collection was severely affected due to mass uprising. Subsequently, protests and ongoing instability at NBR, combined with reduced imports, have prevented revenue collection from picking up pace.”

He added, “As the revenue targets have not been met, Bangladesh now needs to seek exemptions from the IMF regarding this issue.”