Bangladesh Tax Return Filing Rate Falls to 38% in FY26: Multi-Year Low

Dhaka, August 5, 2026 — Although the deadline for filing income tax returns was extended four times until March, the return filing rate fell in fiscal year 2025-26 from a year earlier — reaching the lowest level in nearly a decade and highlighting a persistent gap between taxpayer registration and actual compliance in Bangladesh.

Only about 38 percent of registered taxpayers, including companies, filed income tax returns in FY26, despite a growing number of taxpayer identification number (TIN) holders. Tax experts and business leaders attribute the low filing rate to two factors: an outdated and inflated TIN database containing many inactive registrants, and weak enforcement that leaves many eligible taxpayers outside the tax net.

📊 The Numbers Behind the Compliance Gap

NBR data show the number of TIN holders rose 11 percent to 1.30 crore by June 2026 from 1.17 crore a year earlier. Yet only 49.55 lakh returns were filed, meaning nearly 62 percent of registered TIN holders did not submit returns despite repeated deadline extensions.

• 👥 Total TIN holders: 1.30 crore (up 11% from 1.17 crore)
• ✅ Returns filed: 49.55 lakh (only ~38% of TIN holders)
• ❌ Non-filers: ~62% of registered TIN holders
• 💰 Income tax collected: Tk 1.46 lakh crore (up 13.2% from Tk 1.29 lakh crore)
• 🏢 Corporate TIN holders: 1.60 lakh
• 🏢 Corporate returns filed: 42,000 (up from 39,659)
• 📅 Deadline extensions: 4 times (until March)

The stronger growth in tax revenue despite weaker return filing suggests collections still rely heavily on tax deducted or collected at source (TDS) and advance tax payments rather than voluntary compliance. This structural dependence on withholding taxes means that the NBR can grow revenue without growing the base of active filers — a dynamic that masks the underlying compliance problem but cannot sustainably address it.

🏢 Corporate Tax Filing Also Low

The corporate picture is similar. Of 1.60 lakh corporate TIN holders, only 42,000 filed returns in FY26, up from 39,659 a year earlier. Corporate income tax contributes about a quarter of total tax revenue. Yet collections amount to only 1.5 to 1.8 percent of GDP, roughly half the level in peer economies, according to the Organisation for Economic Co-operation and Development (OECD), and below several small Latin American and Caribbean economies.

The shortfall leaves the government more dependent on VAT, customs duties, and borrowing, with the burden ultimately falling on ordinary people. The LDC graduation roadmap specifically targets increasing the tax-to-GDP ratio to more than 9 percent by 2029, but the current filing rate suggests that achieving this target will require fundamental changes in tax administration, not just incremental policy adjustments.

💬 Expert Views: Database Cleanup vs Enforcement

Both Kamran T Rahman, president of the Metropolitan Chamber of Commerce and Industry (MCCI), and Snehasish Barua, director of SMAC Advisory Services Limited, attribute much of the mismatch to an outdated database. Many TINs were issued not because their holders had taxable income, but because a TIN is required to buy land, register property, open a bank account, obtain a credit card, or secure a loan, Kamran said. Others belong to people who have since died, left the country, or become inactive, yet their records have never been removed.

"The database should be updated regularly so that inactive TINs are removed. That will give a more realistic picture of the country's active taxpayer base," Kamran told The Daily Star. He argued that even the return-filer count overstates compliance because many returns show zero tax due, and that the priority should be expanding the pool of active taxpayers rather than increasing the number of TIN holders.

Snehasish Barua, by contrast, said cleaning up the database alone would not solve the deeper problem. A large pool of eligible taxpayers remains outside the net, and the real solution is enforcing existing rules, particularly the mandatory Proof of Submission of Return (PSR) requirement under Section 264 of the Income Tax Act. City corporations renewing trade licences, banks accepting large term deposits or opening letters of credit, and chambers issuing memberships should require a PSR wherever the law mandates it.

🏛️ NBR Response

Md Rafiqul Islam Chowdhury, NBR member for tax survey and inspection, pushed back against interpreting the low filing rate as evidence of widespread tax evasion, echoing concerns about the TIN database. A significant share of TINs, he said, likely belongs to people who have died but whose records have not been purged, or to people who obtained TINs for credit cards or bank loans without ever having a filing obligation.

Rafiqul said business closures in recent years have also contributed to the low filing rate, as many taxpayers have since become inactive. He added that thousands of teachers and other professionals were brought into the tax net through administrative drives, but many may no longer be filing returns.

To improve compliance, the NBR has introduced year-round return filing under the new Income Tax Act, strengthened enforcement, and most recently offered a tax rebate of up to 5 percent for early filers. Tax offices can now simultaneously issue notices requiring taxpayers to file returns and impose penalties on non-filers. Whether those measures will significantly improve compliance remains to be seen, experts say.

📋 Strategic Context

The declining tax return filing rate represents a significant challenge for Bangladesh's fiscal trajectory at a moment when the government needs to expand revenue mobilisation ahead of LDC graduation. The LDC graduation roadmap targets raising the tax-to-GDP ratio from below 7 percent to more than 9 percent by 2029, but the current filing rate of 38 percent suggests that the gap between registered taxpayers and actual filers is widening rather than narrowing.

The NBR's reliance on TDS and advance tax payments to grow revenue collection provides short-term fiscal relief, but it cannot substitute for genuine voluntary compliance. The 13.2 percent growth in income tax collection is impressive on paper, but it masks a structural problem: the NBR is collecting more from a shrinking pool of compliant taxpayers rather than expanding the base. Until the database is cleaned up, enforcement is strengthened, and the PSR requirement is genuinely enforced across all relevant institutional touchpoints, the filing rate is unlikely to improve significantly — regardless of how many deadline extensions or early-filer incentives the NBR offers.