Bangladesh Cabinet Clears Draft VAT Law Requiring Returns Within 15 Days: Major Tax Reform

Dhaka, September 29, 2026 — The Cabinet on Monday gave final approval, subject to vetting by the Legislative and Parliamentary Affairs Division, to a draft VAT law requiring returns within 15 days. The reform represents a significant modernisation of Bangladesh's Value Added Tax (VAT) collection and compliance framework.

📋 Key Features Of The Draft VAT Law

• 💰 15-day return filing — VAT returns must be submitted within 15 days (more frequent than current monthly cycle)
• 💰 Cabinet approval: final approval given
• 💰 Vetting: subject to review by Legislative and Parliamentary Affairs Division
• 💰 Purpose: modernise VAT collection, improve compliance, increase transparency

💼 Bangladesh's VAT System Context

Bangladesh's current VAT system has several challenges:

• 💰 VAT gap: estimated 30-40% (difference between potential and actual collection)
• 💰 Tax-to-GDP ratio: approximately 7-8% (among lowest in Asia)
• 💰 Multiple VAT rates: complicating administration and compliance
• 💰 Informal economy: large informal sector outside VAT net
• 💰 Manual processes: limited digitalisation in VAT administration

🏛 IMF Connection

The VAT law reform is directly relevant to the IMF programme:

• 📋 Revenue mobilisation — IMF pushing for tax policy reforms
• 📋 Tax administration — IMF conditions include improving tax collection efficiency
• 📋 NBR reform — the new $4.0-4.5 billion IMF programme will likely include NBR reform conditions
• 📋 Fiscal consolidation — reducing the fiscal deficit through improved revenue collection

📜 Looking Ahead

The 15-day VAT return requirement represents a significant change for businesses:

• 📝 More frequent compliance — businesses need to file returns every 15 days instead of monthly
• 📝 Improved cash flow management — for the government, more frequent revenue collection
• 📝 Digital infrastructure — may require enhanced online filing systems
• 📝 Business adaptation — companies need to adjust accounting and compliance processes

The reform aligns with Bangladesh's broader fiscal reform agenda and the IMF programme's focus on revenue mobilisation — which is critical for funding the growing subsidy burden while maintaining fiscal sustainability.