Bangladesh tax revenue falls short in FY26 despite gains

Bangladesh misses FY26 revenue targets despite 25% growth in some taxes

Bangladesh’s revenue collection in the first four months of the current fiscal year (FY26) fell short of expectations. Between July and October, the government gathered Tk 119,478 crore—nearly Tk 17,220 crore below the target. Despite the shortfall, collections still rose by 25.78% in some areas compared to the same period last year.

The country’s tax-to-GDP ratio remains among the lowest in the world, affecting public spending and increasing reliance on loans. Experts suggest reforms to close tax loopholes and improve governance could help bridge the gap.

Value-added tax (VAT) brought in Tk 46,878 crore during the period, missing the target by Tk 1,269 crore. Yet, this figure marked a 25.78% increase over the previous year. Income tax collection also grew by 16.11%, reaching Tk 37,849 crore, though it remained Tk 9,224 crore short of the goal.

Customs revenue stood at Tk 34,751 crore, falling Tk 6,756 crore below expectations. Overall, indirect taxes—such as VAT and customs—outperformed direct taxes like income tax in the July-October period.

In October alone, total revenue collection rose by 2.2% compared to the same month last year, reaching Tk 28,473 crore. For the entire fiscal year, the government aims to collect Tk 4,99,000 crore, equivalent to roughly 8% of GDP.

Analysts highlight that Bangladesh’s low tax-to-GDP ratio limits public investment and widens inequality. To address the deficit, recommendations include tightening tax loopholes, enhancing digital systems, and improving governance in revenue administration.

The first four months of FY26 show mixed results in revenue collection. While growth was recorded in several areas, persistent shortfalls in VAT, income tax, and customs highlight ongoing challenges. Meeting the annual target of Tk 4,99,000 crore will require stronger enforcement and structural reforms in the tax system.