Independent revenue commission on cards for policymaking with businessmen’s input

The National Board of Revenue (NBR) reform committee has recommended forming an independent revenue commission to focus solely on revenue policy formulation with input from stakeholders, including businessmen, economists, and accountants.

The proposed commission, operating directly under the finance minister, will separate revenue collection from policy formulation to create fair policies that reduce taxpayer harassment, according to the reform committee's report, seen by TBS.

To ensure active stakeholder participation in policymaking, a permanent advisory council will be formed within the proposed commission, which will include accountants, economists, business leaders, think tanks, civil society representatives, and officials from key ministries and agencies.

Its role will be to consult stakeholders and provide quarterly advice to the revenue commission based on international best practices.

To resolve taxpayer disputes, the reform committee also recommended placing the NBR's three appellate tribunals under the proposed revenue commission.

With these recommendations, Abdul Majid, head of the five-member NBR reform committee, submitted the report to Chief Adviser Muhammad Yunus on 22 December.

The report also noted that in 2008, the then caretaker government led by Fakhruddin Ahmed issued an order to separate the revenue policy and admin department, but it was not implemented by the Awami League which came to power in 2009.

Economists and business leaders have praised the reform committee's proposal, noting that it will reduce harassment and help establish tax fairness.

Economists said that the proposed revenue commission should be led by someone with a strong understanding of the broader economy and administrative experience, rather than a revenue official, to ensure balance within the commission.

Senior NBR officials told TBS that the reform committee will submit multiple reports, with the first addressing initial recommendations. Future reports may focus on the revenue commission's scope, NBR manpower, taxpayer harassment, and tax collection strategies.

The proposed commission's office may be located outside the Secretariat and Agargaon Revenue Building for easier stakeholder access. It will be led by a senior income tax and customs officer with expertise in revenue policy, holding the rank of secretary or senior secretary, they said.

Business leaders welcome the move

Speaking to TBS, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem welcomed the move, stating, "The proposed revenue commission will provide a platform for business leaders to share experiences, helping draft taxpayer-friendly laws that encourage compliance and boost revenue."

Former Dhaka Chamber of Commerce and Industry (DCCI) president Abul Kasem Khan said the reforms reflect the interim government's strong intent to advance the economy. 

"If implemented, these recommendations will ensure greater accountability. Separating tax-customs related appellate tribunals from the NBR will promote fair tax justice," he said.

Kasem expressed hope that the proposed commission would enhance the NBR's capacity to utilise resources effectively and improve the tax-to-GDP ratio. 

Mashrur Reaz, founder and chairman of Policy Exchange Bangladesh, said that revenue law formulation is a technical task requiring appropriately skilled officials. "The proposed commission's head should come from a broader background, knowing economic issues and with experience in law enforcement and public service."

Md Shahriar, president of the Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association, appreciated the proposal saying, "Those who draft laws should not enforce them. NBR's appellate tribunals should operate independently, akin to the judiciary, to uphold justice for taxpayers."

Why separate revenue admin and policy departments?

The NBR reform committee report highlights the need to separate revenue administration from policy formulation, stating:

"When the same institution is responsible for both tax policy formulation and its implementation, issues such as compromise, corruption, conflict of interest, and irregularities in policy-making, execution, and oversight often arise."

The report further notes that combining these responsibilities forces the authority to focus more on policy-making, leaving insufficient time for enhancing institutional capacity. This dual burden hampers revenue generation and limits efforts to improve overall operational efficiency.

Functions of the proposed Revenue Commission

The proposed revenue commission will develop policies aligned with the government's development strategies, stakeholder input, and international best practices. 

It will determine rates for various taxes and duties, including income tax, travel tax, donation tax, import-export duties, regulatory and supplementary duties, VAT, and excise duty.

Additionally, the commission will draft, amend, and revise tax-related rules and regulations as needed. It will grant tax exemptions in applicable cases and offer clarifications on laws, rules, and notifications.

Making NBR independent

The reform committee suggests revising the National Board of Revenue Order 1972 as a short-term reform measure to strengthen the NBR's structure. 

It recommends elevating the NBR to an independent department under the finance minister, enhancing the status of senior board members, and creating additional positions.

The report also advises collaboration between the Ministry of Public Administration, Finance Division, and Legislative Division to support the proposed Revenue Commission. 

In medium-term reforms, it recommends amending laws and regulations related to income tax, VAT, and customs.