B Mirror Report: The National Board of Revenue (NBR) has abandoned plans to introduce a direct wealth tax in the proposed FY2026-27 budget, opting instead to retain the existing surcharge system on wealthy taxpayers. The decision is expected to cost the government an estimated Tk 9,000-10,000 crore in annual revenue, while full implementation of a wealth tax based on international standards could have generated up to Tk 20,000 crore, according to NBR estimates.

The proposed wealth tax was intended to replace the current surcharge regime and increase tax collection from high-net-worth individuals while reducing economic inequality. Under the draft proposal, net assets up to Tk 4 crore would have remained tax-free, while wealth above that threshold would have been taxed directly based on asset value.

The proposed rates included 0.5% on assets between Tk 4 crore and Tk 10 crore, 1% on assets between Tk 10 crore and Tk 20 crore, 1.5% on assets between Tk 20 crore and Tk 50 crore, and 2% on assets exceeding Tk 50 crore.

According to NBR data, 30,804 registered taxpayers currently fall under the surcharge system, declaring combined assets worth Tk 315,135 crore. The government collects around Tk 1,000 crore annually through the existing surcharge, equivalent to only 0.29% of declared wealth. Officials believe a direct wealth tax could have significantly expanded the tax base to include 200,000-300,000 affluent taxpayers.

A senior budget official said the proposal aimed to ensure more accurate valuation of assets by using current market prices or updated government-assessed land values rather than outdated deed prices. The planned tax would have covered both immovable assets, such as land and property, and movable assets including vehicles, bank deposits, savings, and stock market investments.

Alongside shelving the wealth tax proposal, the NBR is preparing major income tax reforms in the upcoming budget. One of the key changes involves aligning minimum tax and withholding tax rules, a long-standing demand of businesses.

Under the proposed reform, advance withholding taxes deducted during transactions will no longer be treated as non-refundable minimum tax. Instead, taxpayers will be able to fully adjust these deductions against their actual tax liabilities at the end of the fiscal year.

If excess tax has been paid, taxpayers will either be able to carry the amount forward to future tax years or receive an automatic refund within three months through a fully digital electronic Tax Deducted at Source (e-TDS) system.

The NBR said the reforms are designed to reduce business costs, improve tax administration, and provide relief to exporters, importers, large suppliers, and contractors who have long complained about the burden of non-refundable withholding taxes.