Massive reforms are required in tax and VAT laws to mobilise domestic resources and achieve the government's target to become a developed country by 2041, according to experts.

"We need friendly policies and acts for tax return submissions to help to mobilise domestic resources," said Md Amin Helaly, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI).

He was addressing a dialogue on "Strengthening domestic revenue mobilisation for a developed Bangladesh", jointly organised by Policy Exchange Bangladesh (PEB) and the International Growth Centre at The Westin Dhaka yesterday.

He said that the country's GDP grew from $90 billion to $470 billion over the past 15 years, but tax collection increased by only 40 percent.

Helaly added that at least two million people join jobs every year, questioning why the number of regular taxpayers was not increasing.

According to him, there are a lot of businesses in rural areas that deal with crores of taka but are not under the tax net.

"There are also a number of big building owners in rural areas who do not pay taxes. There are some weaknesses in policy design so they are not coming under tax net," he said.

Shamsul Alam, former state minister for planning, said Bangladesh's tax-GDP ratio of 8 percent is the lowest in the South Asian region.

"We need at least 20 percent tax-GDP ratio to become a developed country," he noted.

He said only 1.3 percent of the GDP came from individual taxpayers despite the per capita income having doubled in the past decade.

Alam suggested full automation of the tax filing process and to eliminate unnecessary questions from tax forms to avoid hassle.

Snehashish Barua, managing partner of SMAC, said there are only 3.7 million regular taxpayers despite there being around 10 million TIN holders.

According to him, tax collection increased by 40 percent over the past five years due to different government drives and initiatives.

Regarding the Income Tax Act 2023, he said there was practically nothing new included to help grow government revenue.

He also alleged that actual value of assets are not reflected during the filing of taxes as people hide their assets.

He added that Bangladesh was dependent on the informal economy, which does not help to grow revenue collection despite contributing to the economy.

Moderating the dialogue, M Masrur Reaz, CEO of PEB, said the country needs to increase tax-GDP ratio to 24 percent to achieve the government's Vision 2041.

"We need six times the amount of taxes we currently collect to achieve the government's target," he noted.

Md Farid Uddin, former member of the National Board of Revenue (NBR), said there is potential to increase the GDP-tax ratio to 20 percent, but it requires reforms and modernisation of policies.

Nasir Uddin Ahmed, former chairman of the NBR, and Aminul Aman, research and policy officer of IGC, jointly gave a presentation.

Among others, Bernard Haven, senior economist of the World Bank, and Debabrata Roy Chowdhury, company secretary of Nestle Bangladesh, addressed the event.