Widening the Net: How Tech-Driven Reform, Cross-Agency Enforcement, and Consumption Tracking Can Solve Bangladesh’s Revenue Dilemma
Nazmul Islam Chowdhury,Independent Legal Research.
With the government setting increasingly ambitious revenue collection targets, the National Board of Revenue (NBR) faces a formidable task. Historically constrained by a tax-to-GDP ratio that remains among the lowest in South Asia, Bangladesh stands at a crucial fiscal juncture. To meet these mounting fiscal expectations without overburdening existing compliant taxpayers, the tax administration must shift its focus from raising rates on the few to widening the tax net for the many while introducing structural innovations in expenditure tracking and inter-agency enforcement.
The Uncharted Informal Economy: Unlocking High-Turnover Street Commerce
A central challenge in Bangladesh’s fiscal landscape is the sheer size of the informal and unregistered enterprise sector. Across suburban hubs, municipality markets, and high-footfall urban corners, millions of small business owners—including popular roadside eateries, tea stalls, and mobile food carts—operate entirely outside the formal tax net.
While street vending is traditionally perceived as a low-margin subsistence activity, investigative reports and features across mainstream media consistently reveal a different picture. In prime commercial and university zones across Dhaka and major metropolitan hubs, a high-demand roadside food vendor or food cart can easily generate a daily revenue ranging between BDT 20,000 and BDT 50,000.
On a monthly basis, this grosses up to BDT 6,00,000 to BDT 15,00,000, translating into an annual turnover of BDT 72,00,000 to BDT 1,80,00,000. Because these operators conduct business strictly in unrecorded cash or unlinked digital wallets without a Taxpayer Identification Number (TIN), trade license, or formal accounting trail, vast revenue streams slip through the administrative cracks.
Continuing to squeeze compliant corporate entities and middle-income fixed-salary earners is both unsustainable and counterproductive. True fiscal sustainability requires bringing informal commercial operators into the legal framework. However, expanding the tax net to encompass small business owners must not mean imposing oppressive compliance burdens or complex filing procedures. Instead, it demands a streamlined, predictable, and low-rate introductory mechanism—such as a simplified micro-turnover tax—that encourages voluntary registration rather than driving businesses further underground.
Overcoming NBR’s Manpower Deficit: Sector-Specific Multi-Agency Interoperability
A chronic bottleneck in Bangladesh’s tax administration is the NBR’s limited physical manpower to inspect, verify, and enforce compliance across millions of decentralized commercial outlets. The solution lies in leveraging existing statutory enforcement machinery through a clear, sector-specific division of responsibilities imposed on various governmental agencies:
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- Food and Catering Sector (BFSA): The Bangladesh Food Safety Authority (BFSA), which has promulgated regulations making food business registration mandatory for all food establishments—from high-end restaurants to roadside food carts—will oversee food-related commercial operators.
- General Retail, Services, and Commodities (DNCRP & BSTI): The Directorate of National Consumers’ Right Protection (DNCRP) and the Bangladesh Standards and Testing Institution (BSTI) will cover non-food commercial sectors, including general stores, departmental stores, pharmacies, and outlets selling agricultural, horticultural, and aquacultural products.
- Local Government Bodies (City Corporations, Purashava, Union Parishad), issues Trade License for all types of business establishments.
The Statutory Prerequisite Chain
To turn these sectoral regulatory bodies into frontline gateways for tax compliance, a unified regulatory mandate must be enforced. Each of the agencies issues certain certificates to business establishments. Government shall introduce law that, Trade License shall be the primary license for business establishment, and without trade license, any secondary business license shall not be issued in favor of any business establishment. For issuance of Trade License in favor of any business establishment, Local Government Authorities shall require PSR and Income Tax Certificate of the business owner.
Real-Time Portal Interoperability via Secured APIs
Because income tax returns in Bangladesh are now submitted digitally via the NBR’s e-Tax portal, verification no longer requires paper certificates or manual physical visits. Local Government Authorities (City Corporations and Pouroshavas) must integrate their Trade License Portals directly with the NBR’s e-Tax portal via secured Application Programming Interfaces (APIs). When any enterprise applies for or seeks renewal of a trade license, the portal of the Local Government Authorities will automatically verify whether an authentic, up-to-date tax return has been filed for that specific TIN/NID before approving the application.
Mobilizing Enforcement Infrastructure and Executive Magistrates
To ensure this framework is actively monitored, Local Government Authorities must recruit and deploy dedicated compliance officers alongside an expanded contingent of Executive Magistrates.
Because these agencies and local government bodies are empowered with summary judicial jurisdiction through mobile courts, non-compliant vendors can be penalized directly for operating without valid trade licenses or statutory registrations, rather than being entangled in drawn-out income tax litigation. This decentralized judicial enforcement provides immediate, high-visibility incentives for informal businesses across all commodity sectors to register, file annual tax returns, and operate within the law.
The Next Frontier: The Household Consumer Card System
Beyond bringing businesses into the formal fold, Bangladesh’s tax ecosystem needs a transformative tool to reconcile reported income with real-world consumption. A visionary step forward in this direction would be the introduction of a Household Consumer Identity.
Under this proposed mechanism:
- Registration & Accountability: Every family unit is issued a unified Consumer Identity registered under the NID of the Head of the Household.
- Transaction Linking: Every retail merchant, service vendor, and commercial outlet is mandated to process purchase transactions against the customer’s Consumer Identity number.
- Automated Reconciliation: At the end of the fiscal year, a family’s total annual expenditure records automatically sync to the NBR’s e-Tax Portal. Taxpayers would then be required to account for their reported income against their actual annual consumption patterns, effectively eliminating undisclosed wealth accumulation and major undeclared cash flows.
A Practical Starting Point: The Fuel Pump Pilot Scheme
Implementing such a comprehensive system nationwide from day one would be complex. However, it can be tested effectively through a targeted pilot program at fuel pumps. By mandating that all vehicle fuel purchases (petrol, diesel, CNG, octane) be registered against a vehicle owner’s Consumer Identity or TIN-linked to the Car, the NBR can establish real-time monitoring over one of the most high-volume consumer expenditure sectors. This pilot would not only curb revenue evasion and unrecorded cash transactions in the fuel sector but also create the technical blueprint for rolling out the Consumer Card system to broader retail markets.
Rebuilding the Social Contract
Tax compliance is ultimately rooted in trust and equity. Expanding the tax net among small business holders and introducing consumption tracking requires an institutional culture shift. Citizens and small enterprise owners must view paying taxes not as an arbitrary penalty, but as a gateway to formal credit facilities, government incentive schemes, legal protection, and national development.
By combining digital integration, sector-specific agency collaboration, trade licensing enforcement via APIs, and forward-looking tools like the Household Consumer Card, the NBR can fundamentally transform its revenue collection architecture. Meeting the government’s ambitious revenue targets should not be driven by higher burdens on the compliant, but by a modern, technology-enabled framework that ensures every viable commercial actor and consumer contributes fairly to the nation’s growth.
