Laldia, Pangaon operators to get full tax break for 10 years: NBR chief

The foreign companies managing the Laldia Container Terminal and the Pangaon Inland Container Terminal will receive full tax exemption for 10 years at the terminals, Md Abdur Rahman Khan, chairman of the National Revenue Board (NBR), disclosed yesterday.

"Just a few days ago, at a ceremony at Hotel Intercontinental, we signed agreements for the Laldia terminal and Pangaon terminal. These agreements granted 10 years of 100% tax exemption to the companies, including exemptions for technical staff, royalty payments, and dividends," Khan said at the unveiling ceremony of a study by the United Nations in Dhaka.

The Chittagong Port Authority (CPA) recently inked two deals with two foreign companies to manage the terminals. As per the deals, Danish company Maersk's logistics division APM Terminals will develop and operate the Laldia terminal in Chattogram for the next 30 years, while Switzerland-based logistics firm Medlog SA will manage and operate the Pangaon terminal on the Buriganga in Keraniganj.

Speaking as the chief guest at the study unveiling event, Khan stated that currently, Bangladesh has 1.2 crore registered taxpayers. "But many more, especially those living in rural areas, must be brought into the formal system."

He pointed out that poor people often pay a bigger share of taxes, while big businesses and investors receive many exemptions, making the system unfair. "This undermines fairness and limits our ability to expand direct taxation."

"We have numerous economic zones, special economic zones, export processing zones, and high-tech parks. Authorities can even declare industries in backyards as high-tech parks and grant tax exemptions," he also said, while speaking about Bangladesh's unfair tax system.

According to the study, conducted by the Office of the United Nations High Commissioner for Human Rights (OHCHR), Bangladesh could reduce poverty and make society fairer if it relied less on hidden taxes like VAT and sales tax, which everyone pays when buying goods and services,

These "indirect" taxes currently make up 67 percent of the country's total revenue. As per the new study, unveiled in Dhaka yesterday, the poverty rate could drop by one percentage point to 17.7 percent, if the government collects tax more evenly – 50 percent indirectly and 50 percent directly.

The benefits would be strongest for the poorest people. Poverty among the lowest-income families could fall from 37.2 percent to 33.2 percent, while the next poorest group would see a 3.3 percentage point drop, the study estimates.

It also found that relying more on direct taxes can make income distribution fairer. Currently, the gap between the richest and poorest – measured by the Gini coefficient – is very high. With a fairer tax system, this gap would shrink slightly. Spending differences among households would also become a little more equal.

The Gini coefficient measures inequality on a scale from 0 to 1. Higher values indicate higher inequality. The study suggests it will fall from 0.4999 to 0.490 for Bangladesh when the tax mix becomes more progressive.

The author of the study, Md Salay Mostofa, said that these tax changes could also create jobs.

If the government collected just two percent more of the country's total income in taxes, overall employment could rise by around one percentage point, especially in services like banking, education, and healthcare, followed by agriculture and manufacturing, he stated.

"Progressive tax reforms have the potential not only to improve equity but also to stimulate job creation across key sectors," he said.

Mostofa also pointed out that Bangladesh has not been collecting as much tax as it could.

"Tax efforts over the last two decades have not brought any significant changes in Bangladesh's tax efficiency and have been unable to reach the potential tax-to-GDP threshold," he said. Compared with other South Asian countries, Bangladesh collects the least tax relative to the size of its economy, only above countries like Congo and Iran.

Experts at the event stressed that taxes are not just for raising money, they are a tool to make society fairer.

Sayema Haque Bidisha, economics professor at Dhaka University, said that even small changes in tax policy could improve people's lives if the money is spent on "education, health, and social safety nets to ensure that economic growth benefits everyone, especially marginalized communities."

Prof Abu Eusuf, executive director of Research and Policy Integration for Development, said Bangladesh could collect taxes equal to 14 percent of its economy, nearly double the current 6.6 percent. Instead, the tax-to-GDP ratio has fallen in recent times, reflecting the country's heavy reliance on indirect taxes, which leaves little room for spending on essential services like education and healthcare.

"We need a coordinated big push across the NBR, the private sector, bureaucracy, and other stakeholders. Without it, increasing fiscal space and addressing economic, social, and cultural rights will remain impossible," he said.

Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh, presided over the event.