The National Board of Revenue (NBR) is considering an inheritance tax in the upcoming budget to boost revenue and improve the country’s low tax-to-GDP ratio.
A committee formed by the revenue authority submitted a report on Monday reviewing the legal framework, global practices and implementation challenges of the proposed tax.
An inheritance tax is levied on assets passed to heirs after death, aimed at reducing intergenerational wealth concentration and promoting equality of opportunity.
NBR officials are reviewing the findings and may place a proposal, including possible tax rates, before the budget session scheduled to begin on 11 June.
“We have submitted the report to the NBR chairman as directed. The recommendations will undergo further review before a final decision,” a senior official involved in the process said, requesting anonymity.
If approved by parliament, the tax could take effect from the next fiscal year.
Several advanced economies, including the United Kingdom, France, Germany, Japan and South Korea, impose similar taxes, while the United States applies a comparable estate tax.
Officials say the measure could help address widening income inequality, as large fortunes are often transferred without fiscal obligation.
Bangladesh’s tax-to-GDP ratio remains among the lowest in South Asia, and bringing large estates into the tax net could raise revenue.
Economists, however, warn that implementation will be challenging without structural reforms.
Former World Bank Dhaka lead economist Zahid Hussain said success would depend on building a reliable asset database and strengthening administrative capacity.
He also stressed a high exemption threshold to protect middle-income households and improve public acceptance.
Experts pointed to key challenges, including the absence of a comprehensive asset registry and gaps between market and registered property values, which could complicate assessment and encourage underreporting.
They also said NBR’s current focus on income tax and value-added tax means introducing a new tax would require skilled manpower, technology upgrades and stronger monitoring.
Concerns over double taxation may also trigger resistance, as inherited wealth is often accumulated from already taxed income.
There are also risks of capital flight if high-net-worth individuals move assets abroad, potentially adding pressure on foreign exchange reserves.
Globally, inheritance taxes have delivered mixed outcomes. While many countries retain them, others such as Australia, Singapore and Sweden have abolished them, citing concerns over investment.
Economists suggest a gradual approach, starting with a digital asset registry and improved valuation systems.
Policy Exchange of Bangladesh Chairman M Masrur Reaz said a phased rollout could help manage risks and allow policymakers to learn from early implementation.
