Bangladesh lost an estimated Tk 226,236 crore in tax revenue in the fiscal year 2022-23 due to tax evasion and avoidance, according to a study by the Centre for Policy Dialogue (CPD).

Of this amount, the think-tank estimated that around 50 percent has been lost to corporate tax evasion.

The estimated corporate tax evasion in FY23 would amount to roughly Tk 113,118 crore, the study said.

The CPD unveiled the findings today at a briefing on corporate income tax reform for graduating Bangladesh at its office in the capital.

The study finds a sharp rise in tax evasion since 2011, with estimates reaching Tk 96,503 crore in 2012, and in 2015 it reached Tk 133,673 crore.

The CPD identified several root causes behind Bangladesh's persistent tax evasion problem, including high tax rates, weak enforcement, complex legal frameworks, and widespread corruption within the tax system.

"From a tax justice perspective, high levels of tax evasion undermine compliance by discouraging honest taxpayers and increasing the burden on those who follow the law," the CPD said in its report.

In the context of Bangladesh's upcoming graduation from the Least Developed Country (LDC) status, the rising trend of tax evasion underscores the urgency for enhanced institutional preparedness.

"Graduation is expected to attract increased investment, particularly from multinational companies, which could further widen the scope for tax avoidance and evasion if not addressed effectively."

To tackle these challenges in the post-graduation period, the CPD recommended institutional strengthening, digital infrastructure upgrades, and comprehensive reforms in tax policy.

It also stressed the importance of aligning with global tax agreements and fostering cooperation with other countries to ensure a fair and transparent tax regime.

Besides, the CPD said the corporate income tax (CIT) structure should be gradually reformed to ensure that the statutory tax rate for both export-oriented and non-export sectors is not lower than 15 percent, aligning with the global minimum tax commitment.

As part of this, the government should consider raising the current CIT rate for export-oriented industries, including the ready-made garments (RMG) sector, from 12 percent to 15 percent.