Four pillars to drive NBR’s VAT target for FY27

The National Board of Revenue (NBR) is banking on four key areas to achieve its value-added tax (VAT) collection target of Tk 2.57 lakh crore for the 2026-27 fiscal year. To raise an additional Tk 99,000 crore over the previous fiscal year’s collection, the tax authority plans to narrow the country’s wide VAT compliance gap, accelerate the implementation of government development projects, capitalise on a rebound in economic activity, and tighten enforcement in the tobacco sector.

According to NBR sources, officials yesterday presented their Budget Implementation Plan (BIP) to Rashed Al Mahmud Titumir, adviser to the prime minister on finance and planning, at an internal meeting.

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The VAT wing expects to generate the additional revenue mainly through stronger compliance and enforcement rather than new tax measures.

The largest share, Tk 38,000 crore, is expected to come from narrowing the VAT compliance gap. Officials believe better monitoring, wider use of digital filing, data analytics, and stricter action against tax evasion could significantly boost VAT collection without raising tax rates.

Normal economic growth is expected to contribute another Tk 20,000 crore through a projected 10 percent expansion in economic activity. The estimate assumes stronger consumption, higher imports, and increased business transactions, all of which would naturally expand the VAT base.

Higher implementation of the Annual Development Programme (ADP) is projected to generate an additional Tk 15,000 crore. Increased public spending on infrastructure and development projects is expected to raise VAT receipts, particularly through withholding VAT deducted by government agencies and contractors.

The NBR also expects to collect an additional Tk 12,000 crore from the tobacco and cigarette sector through higher price tiers, tighter monitoring of tobacco leaf processing and cigarette paper imports, and the introduction of a Track and Trace system to curb illicit production and tax evasion.

Together, these four areas are expected to generate Tk 85,000 crore, accounting for the bulk of the additional revenue targeted for FY27.

“We are optimistic about achieving the additional revenue target and are planning our enforcement strategy accordingly,” an NBR official said, requesting anonymity.

In the current fiscal year, the government has set an NBR revenue target of Tk 6.04 lakh crore.

Beyond these broad policy measures, the implementation plan outlines several operational priorities to strengthen VAT administration.

The biggest operational focus is Withholding VAT (VAT deducted at source or VDS), with a collection target of Tk 75,000 crore from about 5,000 withholding entities, including government agencies, autonomous bodies, and NGOs. The VAT wing plans to tighten monitoring to ensure deducted VAT is deposited on time.The NBR also plans to closely monitor 8,000 high-risk institutions, from which it expects to collect Tk 25,000 crore. These businesses have been identified through risk profiling and will face closer scrutiny of their VAT returns and business transactions.

Another priority is auditing 1,000 selected institutions, which is expected to generate Tk 20,000 crore. The audits will cross-check VAT returns against bank statements, income tax filings, national identity records, and other databases to detect under-reporting and fraudulent input tax credit claims.