The VAT Consultants Association of Bangladesh (VCAB) has submitted eight reform proposals and two observations to the National Board of Revenue (NBR) ahead of the FY2026–27 national budget, calling for simplified compliance, stronger digital systems and improved revenue efficiency.
The association said the current VAT structure creates duplication in payments for service providers, leading to inflated refund claims.
It proposed scrapping source VAT deduction where taxpayers deposit VAT directly through VAT-6.3 invoices, arguing this would eliminate double taxation and ease refund pressure.
VCAB also recommended removing source VAT deduction on goods and services already exempted under statutory regulatory orders, saying the current practice undermines intended tax relief.
To improve compliance, the group proposed introducing proportional input tax credit across all VAT rates, including 5 per cent, 7.5 per cent and 10 per cent, to encourage invoice-based transactions and reduce underreporting.
On enforcement capacity, VCAB suggested allowing VAT returns above a defined turnover threshold to be certified by registered VAT consultants with at least five years’ experience, citing international practice where external professionals support tax administration.
The association proposed cutting the mandatory advance payment for VAT appeals from 10 per cent to 5 per cent and allowing bank guarantees as an alternative to cash deposits, particularly for small businesses.
It also called for a one-time self-correction window of up to six months after filing returns without prior approval from tax authorities, aiming to reduce procedural delays and improve voluntary compliance.
VCAB urged the introduction of QR code-based real-time e-invoicing, with all transactions transmitted directly to NBR systems, alongside simplified summary invoicing for small digital payments.
To address refund backlogs, it proposed an automated online refund system, fast-track processing for compliant taxpayers and digitisation of pending claims.
Separately, VCAB flagged weak integration among the Business Identification Number (BIN), Taxpayer Identification Number (TIN) and National Identity (NID) databases, warning that fragmented systems allow inconsistencies in reported income and sales.
It called for real-time application programming interface integration across databases, and linking trade licences, utility bills and banking data to the VAT system to strengthen enforcement and broaden the tax base.
