Bangladesh was set to graduate from Least Developed Country (LDC) status by 2026, a milestone that presented both opportunities and challenges. With the gradual withdrawal of preferential trade and concessional financing, the country needed to strengthen domestic resource mobilization (DRM) to sustain public expenditure and promote inclusive development. Reforming the Value Added Tax (VAT) system, the largest source of indirect tax revenue, was central to this effort. Despite a standard VAT rate of 15 percent, Bangladesh’s VAT-to-GDP ratio remained low, trailing global norms due to a narrow tax base, excessive exemptions, weak enforcement, and burdensome compliance, particularly for SMEs. The regressive nature of VAT placed a disproportionate burden on low-income households, while many exemptions benefited wealthier groups, undermining redistributive goals. As the survey partner, dRi was responsible for conducting a comprehensive primary survey under the study titled “VAT Reform for Graduating Bangladesh: A Justice Perspective.” The survey gathered in-depth, reliable, and disaggregated data on VAT-related practices, experiences, and perceptions from a diverse range of corporate entities across Bangladesh. This empirical evidence contributed to assessing the VAT regime’s performance and developing reform recommendations that promote fairness, reduce compliance burdens, and support inclusive growth in the post-LDC era.
Serial No: 295
Theme: Gender Rights and Violence
Research Method: Quantitative
Partner: Centre for Policy Dialogue (CPD)
Starting Year: 2025
Study Area: Dhaka City, Greater Dhaka, Chattogram, Rajshahi, Khulna, Sylhet, Barishal
