Tax, VAT and customs all miss FY26 targets: Finance minister

Highlights:

• Revenue collection reaches 81.6% of FY26 target
• Income tax achieves 76.7% of target
• Government plans flat-rate tax for new taxpayers
• Market share to guide future corporate taxation

The government fell short of its revenue collection targets across all major sources – income tax, value-added tax (VAT) and customs duties – in FY2025–26, Finance Minister Amir Khosru Mahmud Chowdhury told parliament today (12 July).

Replying to a question from MP Md Abdullah during the question-and-answer session, the minister said the government collected Tk4,10,390 crore in total revenue against an annual target of Tk5,03,000 crore, achieving 81.6% of its goal.

According to the minister, income tax collection reached Tk1,42,827 crore against a target of Tk1,86,110 crore, representing 76.7% of the target.

VAT collection stood at Tk1,55,940 crore, compared with a target of Tk1,86,110 crore, achieving 83.7%.

Meanwhile, customs duty collection amounted to Tk1,11,623 crore against a target of Tk1,30,780 crore, or 85.3% of the annual target.

Govt eyes broader tax base without raising rates

Responding to a supplementary question from BNP reserved-seat MP Shacot Ara Akter on increasing revenue without raising tax rates, Amir Khosru said the government has already launched several initiatives to expand the tax base by bringing more individuals and businesses under the tax net.

He said the government is mapping companies’ market shares across different sectors to build a fairer taxation system.

“We are determining the market share of every company in every sector. Tax liability will be linked to market share because companies with a larger market share should pay proportionately more taxes,” the minister told parliament.

He said such assessments had not been conducted previously, but the government is now systematically identifying companies’ market positions to strengthen tax administration.

The finance minister also announced plans to introduce an area-based flat-rate tax system for individuals and businesses currently outside the tax net.

Under the proposed system, new taxpayers would be able to pay a fixed amount based on their financial capacity without filing income tax returns.

He said the initiative is designed to reduce harassment by tax officials, with taxpayers only required to retain proof of payment after paying the prescribed amount.

“Our objective through this flat-rate system is to build a broad tax network. Once people enter the tax system, they can gradually be brought under the regular tax regime,” Amir Khosru said.