Bangladesh’s revenue collection fell well short of target in the first six months of FY2025–26, underscoring a broader economic slowdown marked by weak investment, subdued consumption and long-standing structural flaws in the tax system.
Data from the National Board of Revenue show a shortfall of Tk45,980 crore during July–December, against a target of Tk231,205 crore. Economists said that while collections grew year on year, the pace remains insufficient to meet the revised annual target.
Income tax recorded the largest gap, missing the target by Tk23,532 crore. Import-stage revenue fell short by Tk12,140 crore, while value-added tax (VAT) posted a deficit of Tk10,308 crore.
Against an income tax target of Tk85,405 crore for the period, actual collection stood at Tk61,873 crore. NBR officials attributed the weakness to shrinking income sources, subdued corporate earnings and weak personal income growth.
Import-related revenue declined as industrial activity and public development projects slowed, reducing demand for raw materials. Collections from imports reached Tk52,861 crore, below the Tk65,000 crore target.
VAT, the largest single source of government revenue, amounted to Tk70,491 crore during the period, compared with a target of Tk80,799 crore. High inflation and eroding purchasing power weighed on consumption, directly affecting VAT receipts across production, distribution and retail stages.
Economists said the underperformance reflects deeper structural issues. Centre for Policy Dialogue Executive Director Fahmida Khatun said the revenue system has long suffered from low effective taxpayer coverage and limited administrative efficiency and technological capacity. She added that rising business costs and falling investment have directly constrained tax collection, arguing that sustained revenue growth requires institutional reform, stronger automation and tougher action against evasion rather than short-term measures.
The broader economy remains sluggish, with weak investment, slow business activity and delayed development spending. The government has adopted austerity measures amid fiscal pressure, further dampening momentum.
Business leaders said political uncertainty has also weighed on investor sentiment. Bangladesh Chamber of Industries President Anwar-ul-Alam Chowdhury said lower revenue collection was inevitable during a slowdown, adding that expectations of strong investment growth were unrealistic in an unstable environment. He said confidence would need to be restored for investment and tax collection to recover.
Macroeconomic indicators reinforce the strain. Inflation rose to 8.49 per cent in December from 8.29 per cent in November, intensifying household spending pressures, particularly on housing, education and healthcare. Provisional estimates place GDP growth in 2025 below 4 per cent, down from more than 6 per cent in previous years, while the World Bank has forecast growth of up to 4.8 per cent for FY26.
