Unlike in many other countries, honest taxpayers in Bangladesh often face higher taxes, harassment and injustice, and are sometimes pushed towards corruption. Meanwhile, tax evaders get away by resorting to corrupt practices, false financial reporting and underpayment. This situation has led to lower tax collection, a narrow tax base, excessive reliance on indirect taxes, an unfavourable investment climate and, ultimately, slower economic growth as seen over the past many years.

Experts have long called for tax reforms, but little attention has been paid. Several initiatives were launched in the past, including the creation of Large Taxpayers Units (LTUs) for both direct and indirect taxes, at considerable public expense. It was intended that all tax circles would eventually follow the LTU model. Unfortunately, this process was systematically and deliberately discontinued by the tax authorities, and the LTUs now function like any other tax circle.

Similarly, the Central Intelligence Cell (CIC) of the National Board of Revenue (NBR) was formed more than two decades ago to combat tax evasion more effectively. Yet, its performance remains unimpressive. Officials there continue to operate in the traditional manner of a tax office. To make it effective, the CIC should include professionals with strong accounting and auditing knowledge alongside expertise in tax laws. Without such competence, tax investigations cannot be meaningful.

Tax reform has been overdue for several years. Admittedly, it is a lengthy and complex process, but some initiatives can be implemented immediately. Short-term measures could include additional certification by independent professionals to verify the accuracy of tax returns, ensure reliable financial reporting and disclose correct taxable profits. These steps would help minimise evasion. Regular audit reports, especially for privately owned businesses, are not sufficient to meet these expectations. Above all, tax audits, an essential tool for combating evasion and corruption, should be conducted more professionally and effectively.

Foreign and multinational companies are often treated differently. Many foreign firms enjoy the privilege of remitting royalties abroad indefinitely. While Bangladesh welcomes investment in technology and capital-intensive industries, consumer goods are not a priority sector for foreign direct investment. Royalty remittance should therefore be permitted for a limited period, say, between 10 and 25 years, depending on the nature of the product and market category.

One of the most significant global developments in recent years has been the introduction of the Faceless Assessment Scheme, a revolutionary reform adopted in several countries, including India, in 2020. Since then, India's tax revenue has improved considerably. The scheme has reduced interaction between taxpayers and officials, lessened the compliance burden and made the system more efficient and transparent for both direct and indirect taxes. Under the scheme, all assessments take place electronically without any physical meetings between taxpayers and tax officers.

The key benefits of Faceless Assessment include eliminating face-to-face interaction, balancing workloads, improving operational speed and promoting local administrative setups. With the introduction of faceless assessment groups, assessment functions have been detached from geographical jurisdictions.

These reforms are neither too difficult nor too challenging. What is needed most is political will and a positive attitude among tax officials. Without such initiatives, the country's tax system will remain stagnant, which is deeply frustrating for both the economy and its citizens. Bangladesh must act now, without further delay. Time is of the essence, and delay only increases the cost.

The writer is a senior partner at Hoda Vasi Chowdhury & Co and a former president of ICAB