NBR offered UN support to raise tax revenues

The Tax Inspectors Without Borders (TIWB), a joint initiative of Organisation for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP), has expressed interest to work with the National Board of Revenue (NBR) free of charge to strengthen the taxation and audit capacity of the board.

If the NBR responds to the call, the tax experts of the TIWB will help NBR to collect more revenues, working alongside au-ditors and other officials on tax issues.

Under this programme, the TIWB will provide experts in the areas of tax crime investigation, Automatic Exchange of Infor-mation (AEOI), digitalisation of tax administrations and environmental issues.

This TIWB initiative has already helped dozens of countries across the globe to collect an average of $2 billion additional revenue annually.

“Given the evidence of higher revenue mobilisation, improved audit capacity and international cooperation, we are sure Bangladesh can benefit from the programme,” said a letter sent to NBR Chairman Abu Hena Md Rahmatul Muneem. The letter was signed by Marcos Athias Neto, director of UNDP’s Sustainable Finance Hub, and Ben Dickinson, head of the Global Relations and Development Division under Centre for Tax Policy and Administration of OECD.

In another letter, UNDP Resident Representative in Bangladesh Stefan Liller said, “Many countries face numerous challeng-es in mobilising domestic resources, which are crucial for providing essential public services. In this regard, TIWB has prov-en to be an effective tool for building taxation capacity.”

Since its launch in 2015, TIWB has successfully helped different countries to collect an average of $2 billion in additional taxes across Africa, Asia and the Pacific, Eastern Europe, Latin America and the Caribbean.

“With TIWB’s support, the NBR can also achieve similar success and make an important contribution to the country’s eco-nomic growth,” Stefan Liller added.

NBR sources said this initiative will help to boost revenue collection, achieve the government’s revenue target, and meet International Monetary Fund’s conditions set against the recently approved $4.7 billion loan for Bangladesh.

While approving the loan, the IMF has tagged conditions to increase the tax-to-GDP ratio by 0.5 percentage points in FY24, followed by 0.5 and 0.7 percentage points respectively in FY25 and FY26. To achieve the target, the NBR will have to collect Tk 2,34,000 crore in additional revenue in the next three financial years.

Meanwhile, the government is likely to set a Tk 4,30,000 crore revenue target for the NBR for FY24. The amount is about Tk 60,000 crore, or over 16 per cent, more than the revenue target set for FY23 which is Tk 3,70,000 crore.

Despite growth in revenue collection, the NBR’s revenue collection during the first eight months of the current financial year is Tk 22,978 crore less than the actual target of Tk 2,19,015 crore.

So, if the revenue deficit widens to around Tk 30,000 crore at the end of the fiscal year, the NBR will have to collect 25 per cent more tax and duties in FY24 than in the current financial year. The board has never achieved such growth.

In this context, if the revenue board takes part in the UN agency’s initiative and can generate around $2 billion in additional revenue, it will help to achieve the target set by the government and meet IMF’s conditions for FY24, said NBR officials.

Some NBR officials are also interested in collaborating with global development partners to mobilise domestic resources.

TIWB provides a range of audit supports

TIWB provides support on a range of technical issues including risk-based audit case selection, audit process and negotia-tion of advance pricing arrangements, said the letter signed by Athias Neto and Ben Dickinson.

It added that the audit support covers a variety of sectors such as agriculture, construction, financial services, hospitality, information technology and communications, manufacturing, and mining.

The initiative has been taken as part of a broad international effort to strengthen developing countries’ ability to effectively tax multinational enterprises, said the letter.

TIWB programme generally involves periodic on-site assistance, composed of several one or two-week missions over a time span of 18 to 24 months, in addition to additional remote assistance when required.

Development partners are funding the work to provide TIWB assistance free of charge for developing countries.

TIWB’s experience in other nations

To date, over $2 billion in additional taxes have been collected and nearly $5 billion in additional taxes have been assessed through TIWB programmes in different countries across Africa, Asia and the Pacific, Eastern Europe, and Latin America and the Caribbean.

Besides, till date, TIWB has worked in 56 jurisdictions, with 58 completed and 55 current programmes, including 21 South-South programmes.