The National Board of Revenue (NBR) is preparing an ambitious plan to bring small and large businesses across Bangladesh under the Value Added Tax (VAT) network in the proposed 2026-27 national budget.
As part of the initiative, the revenue authority plans to reintroduce a “fixed VAT” system and increase the number of VAT-registered businesses from the current 775,000 to 2 million within a year, according to NBR sources.
Under the proposed framework, the VAT network will be expanded nationwide, from rural areas to major cities. Initially, the NBR is considering introducing a minimum “token VAT” of Tk1,000 for small businesses on a pilot basis.
Sources said the NBR has already sent letters to 465 trade associations across the country seeking detailed lists of their members. Authorities plan to use those lists to begin the first phase of expanding the VAT net.
A senior VAT official at the NBR said the upcoming budget will significantly simplify the VAT registration process so that small entrepreneurs can register without facing bureaucratic complications.
According to the official, businesses with annual turnover below Tk50 lakh will be brought under a specified VAT structure determined by city corporations, districts, upazilas, and union-level authorities. Traders will be able to register independently and pay VAT easily through mobile financial services such as bKash and Nagad.
Field-level tax officials will assess the scale of businesses and determine VAT amounts starting from a minimum of Tk1,000. However, officials said there will be no aggressive enforcement during the initial implementation phase.
The proposed system has sparked debate among experts, with some expressing concerns that the new “fixed VAT” arrangement could face the same inefficiencies as the previously scrapped package VAT system. In response, the NBR has formed a special committee to identify past weaknesses and recommend ways to make the new mechanism effective.
NBR data shows that despite lowering the mandatory VAT registration threshold from Tk3 crore in annual turnover to Tk50 lakh, only around 775,000 businesses are currently VAT-registered. Of them, approximately 550,000 regularly submit VAT returns.
Revenue officials believe that simplifying registration procedures and reintroducing a fixed VAT structure could help bring at least 1 million additional businesses under the VAT system.
Speaking at a recent pre-budget discussion, NBR Chairman Abdur Rahman Khan said the government’s goal is to ensure that all businesses contribute VAT.
“We are working on VAT rates. New initiatives will be introduced in the upcoming budget to reduce VAT evasion,” he said, adding that individuals providing information on VAT evasion would be rewarded.
