Bangladesh Faces Potential Revenue Shortfall of Tk 88,000 Crore in FY2025-26, Says NBR

Bangladesh’s National Board of Revenue (NBR) expects a revenue collection shortfall of approximately Tk 88,000 crore in the current fiscal year, according to an update released by the tax authority on Sunday night.

The NBR projects that total revenue collection will reach Tk 415,000 crore by the end of June, compared with the revised target of Tk 503,000 crore for customs duties, value-added tax (VAT), and income tax collection.

According to the NBR, total revenue collection stood at Tk 389,953 crore as of June 20, covering the first 11 months and 20 days of the fiscal year. During the first 20 days of June alone, the authority collected Tk 29,311 crore.

The agency estimates that an additional Tk 25,000 crore could be collected during the final 10 days of June. If achieved, total revenue collection would reach a record-high Tk 415,000 crore, the highest annual revenue collection in the country's history. However, it would still fall short of the revised target by around Tk 88,000 crore.

To accelerate revenue collection, the NBR said it has already formed three separate task forces comprising field-level officials from the income tax, VAT, and customs departments.

The task forces have undertaken various measures to boost tax collection, including expediting the resolution of cases pending before appellate authorities, tax tribunals, the High Court, the Supreme Court, and alternative dispute resolution mechanisms.

Revenue shortfalls have significant implications for government finances, as the NBR typically provides more than two-thirds of the resources required to fund the national budget.

A decline in revenue collection can place pressure on government expenditure. However, mandatory spending items such as salaries and allowances for public employees, interest payments on domestic and foreign debt, and other recurrent expenditures leave little room for budget cuts.

As a result, when fiscal pressures emerge, the government often has limited flexibility to reduce operating expenses and instead tends to scale back development spending.

The Annual Development Programme (ADP), which finances government development projects, is usually the primary area affected. The government is implementing an ADP worth Tk 200,000 crore in the current fiscal year. When revenue collection falls short, reducing ADP allocations often becomes one of the few available options.

Bangladesh has also struggled with a persistently low tax-to-GDP ratio. The ratio has declined to around 6–7 percent in recent years, one of the lowest levels among comparable developing economies, posing a long-term challenge to the country's fiscal sustainability and public investment capacity.