The National Board of Revenue plans to introduce a data-driven system to identify discrepancies between taxpayers’ declared income and their actual spending and assets, with the aim of detecting tax evasion and boosting revenue collection. The system will have an integrated profile for every taxpayer, comparing declared income with spending on credit cards, education, healthcare, foreign travel, bank transactions, vehicle purchase, investments in shares, and other movable and immovable assets.
System Details
The system will automatically assess whether a taxpayer’s income, expenditure, and assets are consistent. Significant discrepancies will trigger a higher-risk classification. They plan to complete integrated taxpayer profiles and establish an income tax data warehouse within two to three years. The NBR will also profile high-net-worth individuals to assess whether their tax payments are commensurate with their economic capacity.
According to the report, the NBR collected Tk4,15,476 crore in revenue in the last fiscal year. The government has set a revenue collection target of Tk6,04,000 crore for the current fiscal year. The plans aim to raise Bangladesh’s tax-to-GDP ratio from 6.8% by two percentage points in the short term, to 10% of GDP in the medium term and 15% by 2035.
Curbing Tax Evasion
The NBR has also proposed creating customs attaché posts at Bangladesh missions in major trading partner countries to curb laundering and revenue leakage. These proposed attachés would help collect information on the origin of imported goods, exporter details, commercial transactions, and relevant foreign companies. Domestic data alone is insufficient to detect such risks.
The automated income and asset profiles will include taxpayers’ declared income and tax payments, bank transactions, immovable property, company ownership, stock market investments, import and export volumes, withholding tax, foreign travel, bank accounts, and high-value transactions. For example, a taxpayer may declare an annual income of Tk12 lakh while having Tk1.2 crore in bank deposits, purchasing a vehicle worth Tk50 lakh and land worth Tk1 crore, and travelling abroad five times a year.
Such discrepancies will be automatically flagged by the National Income Tax Data Matching System, enabling data-driven enforcement. They are currently developing industry benchmarks for companies in the same sector to help identify potential corporate income tax evasion.
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Active Taxpayer Registry
The NBR also plans to launch property-based income tax compliance programmes in major cities to increase revenue from houses, flats, and commercial properties. It wants to cleanse its TIN database and create an active taxpayer registry. Those who regularly file returns and pay taxes will be classified as active taxpayers, while those who file returns but do not pay taxes will be placed in a separate category.
The NBR will maintain separate lists of TIN holders who do not file returns, those who have not filed returns for an extended period, and individuals engaged in economic activities but without TINs. An annual target will be set for growth in the number of active taxpayers, with the number of new active taxpayers created by each tax office included as a key performance indicator.
Within the next three months, the NBR will clean and classify its TIN database, prepare a list of taxpayers with the highest outstanding income tax liabilities, and identify high-risk companies and high-net-worth individuals. Within three to six months, it will conduct awareness campaigns to encourage taxpayers to file returns and make its High-Net-Worth Individual Unit operational.
The use of data analytics and automation will play a significant role in identifying and preventing tax evasion. By leveraging technology and data, the NBR may be able to more effectively track and monitor taxpayer activity, reducing the risk of discrepancies and increasing revenue collection.
The NBR plans to introduce pre-filled tax returns, nationwide risk-based audits, faceless assessments, and automated refunds within one to two years. They will also strengthen medium-taxpayer segmentation and build capacity in international taxation pricing. Within two to three years, the NBR plans to establish integrated taxpayer accounts, full third-party data matching, an income tax data warehouse, automated detection of income-asset mismatches, tax gap estimation, and advanced analytics-based enforcement.
Experts note that recruitment agencies in countries like Malaysia often face scrutiny over their practices, and similar issues may arise in the context of tax evasion and revenue collection.