The government plans to introduce a direct wealth tax in the upcoming national budget to replace the surcharge on rich individuals’ income tax, aiming to reduce inequality and raise revenue.
National Board of Revenue (NBR) officials view this as a structural shift in taxing the wealthy, with officials saying the current surcharge system fails to effectively tax the rich and undermines the progressivity of the tax regime.
The surcharge adds a few percentage points in income tax for wealthy individuals. The new plan is to collect a wealth tax based on the asset value.
Under the plan, net wealth up to Tk4 crore will remain tax-free, followed by 0.25 per cent on the next Tk2 crore, 0.50 per cent on the next Tk5 crore, 0.75 per cent on another Tk5 crore, and 1 per cent on the remaining wealth.
For valuation, land will be assessed at mouza rates, buildings at Public Works Department rates, gold at market prices, and shares at either cost or net asset value, whichever is higher.
The reform comes amid structural weaknesses in the current system under the Income Tax Act 2023, where effective surcharge rates decline at higher wealth brackets and liabilities depend on reported income, allowing individuals with low declared earnings to avoid tax.
Bangladesh currently collects surcharges up to 35 per cent of the payable income tax for wealthy individuals.
For wealth between Tk100 crore and Tk200 crore, the effective surcharge rate is about 0.43 per cent, lower than the 0.54 per cent applied to the Tk50–100 crore bracket.
Data for the 2025–26 tax year show 30,804 taxpayers declared combined net wealth of Tk3,15,135 crore, but surcharge collection stood at around Tk1,000 crore, or 0.29 per cent of total wealth.
Wealth concentration is high, with 13 taxpayers holding 2.69 per cent of total declared assets at an average Tk646 crore each, while 186 individuals with more than Tk100 crore account for 12.12 per cent.
A micro-analysis of 27 taxpayers suggests actual asset values could be 89 per cent higher than declared, which could raise potential revenue by up to 345 per cent compared to the current system.
In one case, a taxpayer with zero surcharge liability could face a wealth tax of nearly Tk40 crore after revaluation.
Officials estimate the new framework could raise total revenue to about Tk3,000 crore, generating an additional Tk2,000 crore.
The proposal includes enacting a Wealth Tax Act 2026, introducing an automated e-return-based assessment system, forming a permanent valuation committee, and establishing a two-tier dispute resolution mechanism, with rules to be reviewed every five years.
Experts warned of implementation risks, including underreporting of assets, capital flight, and challenges in detecting undisclosed wealth due to weak data infrastructure.
They said the system would require a reliable asset database, robust digital tax administration, and strict enforcement to achieve the expected gains.
SMAC Advisory Services Managing Director Snehasish Barua said asset valuation is complex and could lead to disputes and higher administrative costs.
He said the tax may disproportionately affect compliant taxpayers while leaving parts of the informal sector outside the net.
Barua warned that investors may be forced to liquidate assets, affecting the stock market, while capital outflows could add pressure on foreign exchange reserves.
He said individuals with high-value assets but limited cash income may face liquidity stress, leading to forced sales and disruption to long-term investments.
Countries remain divided on wealth taxes. France scrapped its system in 2018 citing investment concerns, while Norway continues to impose a tax of about 0.85 per cent and Switzerland applies levies at canton level ranging from around 0.1 per cent to over 1 per cent.
Spain has revived its wealth tax with rates reaching about 3 per cent, while Argentina introduced a temporary levy after the pandemic. Germany, Sweden, and Denmark have abolished such taxes citing administrative complexity, high compliance costs, and capital outflows.
