Major Overhaul of Bangladesh’s Tax Administration: New Ordinance Separates Revenue Policy from Management

On May 12, 2025, in a landmark move set to reshape the country’s fiscal landscape, the President of Bangladesh promulgated the Revenue Policy and Revenue Management Ordinance 2025. This significant piece of legislation initiates a fundamental restructuring of the nation’s revenue administration framework by separating the government’s revenue policy-making functions from its revenue management and collection operations.

The stated purpose of the ordinance is to enhance the transparency and accountability of the country’s revenue collection activities.

Key Provisions of the Ordinance

Core to the reform is the establishment of two distinct and independent bodies under the Finance Ministry:

1. The Revenue Policy Division: This division will be exclusively responsible for the formulation of tax policy. This includes proposing changes to tax laws, engaging in tax treaty negotiations, and conducting research and analysis to develop a stable and predictable tax regime.
2. The Revenue Management Division: This division will be tasked with the operational aspects of tax administration, including the assessment and collection of taxes, conducting audits, managing taxpayer services, and enforcing compliance with existing tax laws.

This new structure will oversee the administration of all major revenue-related legislation in Bangladesh, including the Value Added Tax and Supplementary Duty Act of 2012, the Income Tax Act of 2023, and the Customs Act of 2023.

The ordinance specifies that the National Board of Revenue Order, 1972 (President’s Order No. 76 of 1972) is repealed, and the National Board of Revenue (“NBR”) constituted under it is dissolved once the ordinance enters into effect after it is published in the official gazette.

The ordinance was enacted under Article 93(1) of the Constitution, as Parliament was not in session and the President deemed immediate action necessary. However, the NBR continues to operate as before for practical considerations, and in addition, there have been several protests opposing the split of the NBR into two separate entities. In response, a Unity Council has been formed to demand the withdrawal of the ordinance. It remains to be seen whether the ordinance will be amended or repealed.

Potential Implications for Businesses and Taxpayers

If the ordinance does enter into effect, it is expected to have several profound implications for the business community and taxpayers:

• Focused and specialized functions: By creating two specialized divisions, the government aims to foster deeper expertise in both policy formulation and administrative execution. The Revenue Policy Division can focus on long-term economic goals and international best practices without being encumbered by day-to-day collection pressures. Simultaneously, the Revenue Management Division can focus on improving operational efficiency, digitization, and taxpayer services.
• Enhanced transparency and reduced conflicts of interest: Separating the body that writes the rules from the body that enforces them is a globally recognized good governance practice. This separation can reduce potential conflicts of interest, leading to fairer enforcement and a more transparent tax environment for businesses.
• Greater predictability in tax policy: A dedicated policy division may lead to more consultative and predictable changes in tax law, allowing businesses to plan their investments and financial affairs with greater certainty. This could reduce the frequency of ad-hoc changes and create a more stable fiscal environment.
• Streamlined tax administration: With a singular focus on administration, the Revenue Management Division is expected to streamline processes for tax filing, audits, and refunds. This could lead to faster resolution of taxpayer issues and more efficient administration.