December IMF-NBR meeting to fix strategy.

The IMF mission will visit Dhaka next December ahead of the release of the next installment of the $4.7 billion loan approved for Bangladesh. Keeping this mission in mind, the officials of NBR and related departments will hold a meeting with the Ministry of Finance on Wednesday (November 20) to finalize the action plan to meet the conditions of the organization.

Tax GDP, compliance with IMF conditions, revenue targets, automation etc. are gaining importance in this. This information is known from the source of NBR.

NBR officials said they will inform the IMF about the tax GDP growth strategy and revenue collection situation. Action plans will be decided on Wednesday. In the light of the terms of the IMF loan, a roadmap has been drawn up on how to collect large sums of revenue in the income tax, customs and VAT sectors. On Wednesday, the Governor of Bangladesh Bank, Chairman of NBR, Department of Internal Resources, Ministry of Commerce, Department of Power and Department of Economic Relations will attend the meeting and finalize the proposed action plan.

NBR is lagging behind in meeting the conditions of the loan given to Bangladesh. After the change of government on August 5, the meeting of IMF and NBR was held on September 24. In that meeting, the IMF wanted to know why the NBR could not meet the condition of tax hike of 10.5 percent of the Gross Domestic Product (GDP) in the fiscal year 2023-24. Also, IMF advises the NBR to come out of the culture of tax exemption, tax remittances, bring government and private sector employees into a similar tax structure, reduce tax exemptions against investments in various funds, bring in automation of corporate return filing, formulate a medium and long term fiscal strategy.

It is known that the NBR has prepared an action plan for how the conditions of the IMF will be met during the rest of the financial year. Which will be fixed in Wednesday’s meeting.

The NBR has imposed higher tariffs in the current fiscal year’s budget as per IMF conditions. As a result, the NBR estimates that the tax-GDP ratio will increase by 0.50 percent. On the other hand, to increase tax GDP and tax fraud, NBR has emphasized on doing income tax return and income tax registration online.

NBR will report to IMF on progress in meeting loan conditions
This time it has been made mandatory to submit income tax return online for all government officials and employees under Dhaka North, Dhaka South, Narayanganj and Gazipur City Corporation and all scheduled banks, mobile phone operators and several multinational companies. Besides, the obligation of individual taxpayers to upload any supporting documents while filing e-returns has been removed. Tax payment fees through internet banking and mobile financial services (MFS account) have been reduced.

According to sources, the plan of NBR has said that this target is 4 lakh 72 thousand 900 crores for the financial year 2024-25 and 5 lakh 67 thousand 200 crores for the financial year 2025-26. But currently the country’s tax-GDP ratio is 7.60 percent. The IMF wants to increase it to 8.60 percent in FY 2024-25 and to 9.10 percent in FY 2025-26. This target is challenging for NBR in July and August and its changing circumstances. Nevertheless, the company has fixed some strategies. NBR officials believe that if these strategies are implemented, the tax-GDP ratio will increase as per IMF conditions. These strategies include automation, making NBR paperless, reducing the suffering of service providers, bringing corrupt people under the law and taking action against tax evaders.

It is also known that the revenue deficit has exceeded Tk 30 thousand crores in the first 4 months of the current financial year. NBR officials feel that it is difficult to meet the target of revenue collection in this reality.

On condition of anonymity, an NBR official told Media that the revenue collection targets given by the previous government are very unrealistic. Because achieving such a big target in a fragile economy is challenging.

In the current financial year, a total of 4 lakh 80 thousand crores of duties and taxes, i.e. revenue collection target has been set for NBR.

When asked about the purpose of Wednesday’s meeting, Dr. Additional Secretary of Finance Department. Ziaul Abedin said, there will be a review of how far any organization has progressed in meeting the goals of the IMF. I will tell them about the various initiatives taken by us.

When asked if the IMF’s goals will be met, he said, “Most of our goals have already been met.” There will be no problem with IMF targets.

It is known that there are 38 conditions for various departments including NBR, Bangladesh Bank in IMF loan waiver approved in 7 installments till 2026. Debt waivers may be delayed unless there is a visible progress on these conditions and reform proposals. Therefore, the concerned parties are preparing to comply with the conditions before releasing the next installment.