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Tax evasion in Bangladesh reached alarming levels in 2023, with the government losing an estimated Tk2.26 lakh crore, according to a new report by the Centre for Policy Dialogue (CPD).
At a press briefing held in Dhaka on Monday, CPD revealed that nearly half of this loss stemmed from corporate tax evasion, underlining deep-rooted issues in the country’s revenue system.
The report traces the exponential rise of tax evasion back to 2011, the second year of the Awami League’s 15-year rule. In 2012, evasion stood at Tk96,503 crore and increased significantly over the years, reaching Tk133,673 crore by 2015. This upward trend has continued, reflecting both weaknesses in enforcement and loopholes exploited by powerful actors.
While Bangladesh struggles with increasing tax evasion, global trends show a gradual reduction in corporate income tax (CIT) rates over the years. The average global CIT rate dropped from 27.5 percent in 2006 to about 23.6 percent in 2016. Despite this trend, many developing countries still maintain relatively high CIT rates—China imposes a rate of 25 percent, Malaysia 24 percent, Indonesia 22 percent, Pakistan 29 percent, and Myanmar 22 percent.
However, some developing and least developed countries (LDCs) have adopted lower tax regimes to attract foreign investment. Oman and Uzbekistan offer a 15 percent CIT, while Paraguay and Kyrgyzstan have one of the lowest rates at just 10 percent. Among LDCs and countries that have recently graduated from LDC status, corporate tax rates range widely from 10 percent to as high as 35 percent.
The CPD report underscores the urgent need for reforms in tax policy and administration to reduce evasion and improve domestic resource mobilization, which is crucial for sustainable economic development.
